The Trade Hub Archives

In this week’s edition: Trump’s 35% tariff threat, Canada seeks partners across the Pacific, and the Canadian chocolatier that’s benefitting from the U.S. boycott.

High Noon in Canada

We seem to be in the Wild Wild West as Donald Trump’s latest 35% tariff threat against Canada disregards the July 21 deadline and disrupts the behind-closed-door negotiations underway.

The new deadline is August 1, by which date Canada has been asked to address several U.S. trade irritants, including supply management and the flow of fentanyl across the border. CUSMA-compliant goods crossing the border will “most likely” be exempt, said one U.S. official, in a volley of trade attacks on friends and foes alike that’s designed to confound and confuse—and lead to capitulation.

The latest threats from Washington have spurred the federal and provincial governments to look for new avenues of growth, seek new partners—east and west—, and rev up the dormant interprovincial trade engine.

Some Canadian policymakers were looking to do just that at the Calgary Stampede this week. The Greatest Outdoor Show on Earth, as it’s called, has become a blend of rodeo, carnival, and business fair, pulling in a million people a year.

Mark Carney and Pierre Poilievre were there, along with a gaggle of premiers and senior ministers. Ontario’s Doug Ford brought six cabinet members as he pushes ahead with his domestic trade agenda.

Here’s some of what’s at play as Canada looks for new trade streams:

A $100B energy package: Alberta and Ottawa are making progress on a big energy package that could include an oil pipeline to the West Coast, the Pathways project to capture carbon emissions, and room for expanded oil production. The Pipeline + Pathways package has a lot of political punch, but headline costs could be sobering. Add in the costs of expanding production, and the sticker could reach $100 billion. Now, that’s an investment over many years designed to deliver a multiple of that in economic growth and government revenue. But anything of that magnitude will require an explainer-in-chief.
New corridors: Pancake-flipping Ford and Alberta’s Danielle Smith also agreed to a feasibility study of new pipelines and rail lines between the two provinces, pledged to increase interprovincial trade of alcohol and vehicles, and push for nuclear energy development.
Pacific partners: International investors are very interested in Canada, as a relatively safe alternative to much of the world, including the U.S. But Japan and India wants to see action on regulatory reform, and more investment in export infrastructure. The biggest question is how quickly Canada can move on Indigenous consent for major projects.
Megaproject port side. ThePort of Vancouver is looking to boost its total capacity by 70% through the proposed Roberts Bank Terminal 2 Project. Canada’s main gateway has begun looking for a contractor to build the $3-billion project to boost trade with Asia.

A lot is at stake, and the country doesn’t have much time.

The week that was

A federal red-tap review is under way to weed out rules that impede internal trade and business investments. Cabinet ministers are also being asked to find ambitious spending cuts amid Ottawa-wide belt-tightening.
Canadian firms, such as Purdys Chocolatiers, are reporting brisk domestic business as the U.S. brand boycott persists in the country.
Global trade surged in the first half of 2025, but slowing global economic growth pose risks for trade in the latter half, the UN warns.
President Donald Trump’s trade threats and actions now extend to copper, pharmaceuticals and Brazil. Around 14 countries also received tariff missives with the President’s classic sign-off: “Thank you for your attention to this matter!”
A cavalcade of small U.S. businesses and interest groups are filing cases against Trump’s litany of tariffs imposed under the International Emergency Economic Powers Act.

From West to Rest: Can BRICS+ Redraw the Trade Map?

Multilateral cooperation is a delicate balancing act at the best of times. For half a century, the G7 skillfully juggled competing interests and represented the values of liberal openness, democratic governance, and pluralistic tolerance on the world stage. But with President Trump firing tariff missiles in all directions, including G7 partners, the BRICS+ bloc, seen as an emerging market counterweight to the G7, is quietly emerging as an attractive alternative for some nations.

The 11-nation group met in Rio de Janeiro last weekend. And while some have argued that the bloc lacks any basis for unity or cohesion apart from antipathy to the G7, the geo-economic coalition’s rising influence cannot be denied.

Formed in 2009, the bloc initially included Brazil, Russia, India and China, but now encompasses South Africa, Egypt, Ethiopia, Indonesia, Iran, and the UAE, with Saudi Arabia mulling over its membership. Together these countries account for more than a third of global GDP and nearly half of the world’s population. As a trading bloc, the BRICS+ eclipsed the G7 in merchandise exports in 2021, accounting for 30% of the global total.
Will Trump’s tariff war accelerate the G7’s relative decline? And will the BRICS+ be able to re-orient trade flows, proving to be a more influential voice for non-Western countries in multilateral governance? It’s too early to tell.
But the U.S. is already worried, with Trump threatening tariffs on countries aligning themselves with what he calls the bloc’s “Anti-American policies.”
Will Canada get swept up in the U.S.-BRICS cross-currents? Ottawa is already looking to reset ties with China and India—two founding members of BRICS. Foreign Affairs Minister Anita Anand, who is currently in Asia, says Canada is looking to wrap up free trade agreements with Southeast Asian nations—as soon as possible—, several of which are likely BRICS membership candidates.
As the Canadian government seeks relief from Trump’s tariff blitz, a longer-term trade strategy confronts the diminished status of G7 nations. How members of the BRICS+ fits into Canada’s trade future remains unknown, especially as Ottawa wants to avoid giving Washington any ammunition to blow up their fragile trade negotiations.

After decades of a unipolar world, the return of a multi-polar world is complicating Canada’s efforts to seek new trading partners.

The big number

11,000

The increase in the number of Canada’s trade-dependent manufacturing sector in June. Overall, the ecomony created 83,000 jobs, a figure that surprised analysts given the uncertainty around trade and investments.

The race North America can’t afford to lose

As the North American auto industry reels under the weight of U.S. tariffs, the real story on autos may not be in Washington, but in Shenzhen, where Chinese electric vehicle (EV) behemoth BYD’s headquarters are located.

Ford CEO Jim Farley has been the most vocal about the need to “humbly accept” Chinese leadership in EV technology. The executive even imported Chinese EVs recently to test their build quality. Canada and the U.S. remain the only two major nations with no consumer access to Chinese vehicles—the U.S. imposes an almost 150% duty on new Chinese EV imports and Canada has a 100% tax—but Chinese cars are widely expected to come to North American shores at some point.

The almost-overnight success of BYD, which has ramped up production to four million units in just four years, is notable. The automaker surpassed Tesla last year as the world’s largest EV seller. BYD’s patented Blade battery is considered to be among the world’s safest and most affordable, while its autonomous driving system is deemed to be as good as, if not better than, Tesla’s. Most stunning? BYD’s EVs come at bargain prices—on average US$20,000 (C$27,400), less than half the cost of a new North American vehicle.

Whatdoes China’s enhanced automotive industrial capacity portend for Canada’s auto industry, which has been under strain for the better part of two decades? Provincial and federal governments invested heavily in the EV value chain, but with stalling EV sales (9% of total sales in Q1, 2025, compared to 18% in Q4, 2024) and paused or postponed production facilities (Honda, BASF, Northvolt to name a few), the soundness of Canada’s EV bet is being questioned. Pressure on Ottawa from some automakers to scrap the EV mandate could be another body blow to the nascent industry.

One thing seems certain: Americans, Canadians and Mexicans fighting with each other over auto production will not catalyze innovation—it would only accelerate China’s global EV lead.

The Trade-Offs of Supply Management

Trade irritant, stable, costly, secure — these are just a few of the words currently being used to describe Canada’s supply management system, underscoring the renewed debate it’s attracting.

Supply management has faced scrutiny during nearly every major trade negotiation and economic downturn — and it’s poised to be a key discussion point in next year’s Canada-U.S.-Mexico Agreement (CUSMA) review.

The debate is no longer confined within agriculture’s siloed walls. Supply management touches many corners of Canada’s economy: from food prices and consumer choice to supply-chain jobs, trade diversification, and economic growth.

In RBC Thought Leadership’s latest report, Supply Management Explained, we take a closer look at the system’s benefits and drawbacks.

Read the full report here.

Final Word

“We’ll fight against it. Period.”— Canada’s Trade Minister Melanie Joly, responding to Donald Trump’s threat to impose 50% tariffs on imported copper.

Executive Summary

Canada’s $30-billion supply management system has underpinned national food sovereignty and security for more than 50 years. Covering dairy, chicken, turkey and eggs, the system has ensured price and supply stability for food staples.
The system recognizes that producing food is costly. The arrangement fosters supply-chain stability, however, it could lead to higher consumer prices, especially amid rising input costs.
Supply management’s three foundational pillars are under attack—again. Production quotas, set pricing, and import quotas ensure the system’s integrity. But all three are facing calls for reform within Canada and from its biggest trading partners, including the United States (U.S.).
A new law limits Ottawa’s ability to open up the sector. The system’s advocates say Bill C-202 prioritizes national food security and restricts the Foreign Affairs Minister from making new concessions in any trade deal. Other experts say it could hurt Canada’s position in trade negotiations, including the impending Canada-U.S.-Mexico Agreement (CUSMA) review next year.
Trade deals are chipping away at Canadian producers’ dominance. Yet, expanded global market access for Canadian supply managed farmers may run counter to the system’s design. A small production base tailored to domestic consumption makes them ill-equipped to compete as exporters in global markets, where high volume and competitive pricing are crucial.
Canada is not alone in facing tough policy choices on agriculture. New Zealand agriculture is grappling with its outsized greenhouse gas footprint, while the United Kingdom is finding its feet post-Brexit. Brazil, second only to the U.S. in total agri-food export value, is eyeing greater global market share. Canada could draw some lessons from these international shifts as it evolves its domestic food sector.

Shifting trade policy landscape for supply managed industries

Canada’s supply management has caught the eye of the Trump administration, again, which has identified it as a major irritant as the two countries renegotiate their trade deal.

That has led to a new debate about Canada’s supply managed food industries, including dairy, chicken, turkey and eggs, that has been a staple of Canadian policy since the 1970s.

At its core, the system provides a stable price that fairly compensates farmers for producing high-quality food. The system’s advocates say it boosts food security, supports domestic producers, and ensures consistency of quality and supply for consumers, while critics say it stifles innovation, inflates prices and limits competition.

The system has come under scrutiny in nearly every trade negotiation and economic downturn, and will likely be a discussion item at the impending Canada-U.S.-Mexico-Agreement (CUSMA) review next year. It’s also being debated amid a domestic push to develop a unified market for goods and services. The conversations are evolving from polarizing calls between dismantling the system and business-as-usual, to a wider spectrum of ideas on reforming the system that’s been around for more than half a century.

Those looking to preserve the system are on the move. In June, Bill C-202 received Royal Assent with strong support from Canada’s supply-managed farmer associations. The Act instructs the foreign affairs minister to stop opening more dairy, poultry or egg quota to trading partners through international trade agreements. Still, the debate continues as stakeholders carve out specific areas for discussion, from the regional milk pooling systems to debating which part of the supply chain should get access to the foreign quota allotment.

The debate is not just bouncing off agriculture’s silo walls. It impacts many aspects of the Canadian economy, including food prices, choices, supply-chain jobs, and Canada’s trade diversification and growth prospects.

What’s at stake?

Supply management in numbers:

1%. The managed sectors’ contribution to Canada’s GDP, amounting to more than $30-billion. The entire agriculture and agri-food sector accounts for more than 7% of Canada’s GDP.^{1 2}
339,000. The number of full-time jobs in supply managed industries, from farm to processor to distribution.³
14,699. The number of supply managed farms in Canada, or 8% of nearly 190,000 farms across the country.⁴
9,430. The number of dairy farms, primarily in Quebec and Ontario. Dairy farm numbers across Canada are down by more than 50% since the early 2000s, due to market consolidation.⁵
7%. The growth in the number of poultry and egg farms over the past two decades. They are largely concentrated in Ontario, British Columbia, and Quebec, with Prairie provinces also seeing an uptick.⁶

The 3S of supply management

The Canadian system is designed to uphold food sovereignty, stability and standards, which helps the industry prosper, but also presents challenges in a changing global food market.

Sovereignty

Supply management ensures stable prices and a robust domestic supply chain to meet demand. But as Canadian processors hold the majority of the tariff rate quota (TRQ), which is a set amount of low tariff imports, foreign importers have argued that they have limited access to Canada’s markets to fulfill their non-tariffed trade volumes negotiated in the agreement.

Supply management has emerged as a point of friction with Canada’s largest trading partners, especially the U.S., the European Union (E.U.), and, more recently, New Zealand. A key sticking point: Canada’s restrictions on import quotas.

The quotas are intended to limit imports within Canada’s supply management industries. In recent trade negotiations, however, Canada has made greater concessions, for example, in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) negotiations Canada agreed to provide participating countries, with an estimated 3.25% of Canada’s domestic dairy market.⁷ But as Canadian processors hold the majority of tariff import quotas, foreign importers have argued that they have limited access to Canada’s markets to fulfill their non-tariffed trade volumes negotiated in the agreement.

Trade deals are chipping away at domestic producers’ dominance: Trade concessions have resulted in Canada running a small trade deficit on all supply managed products, except chicken meat. For example, imports now represent roughly 4% of Canada’s dairy market.⁸ This has led to government payouts to dairy, poultry, and egg farmers and processors of $4.8 billion to compensate the industry’s forgone profits from foreign competition.⁹ Such payouts means Canadians are paying for their supply managed food at the cash register—and additionally through taxes.

Between 1995 and 2017 foreign access to Canada’s dairy TRQ was limited to commitments under the World Trade Organization (WTO). As CUSMA, the Canada-European Union Comprehensive Economic and Trade Agreement (CETA) and CPTPP are phased in over the next ten years, Canadian foreign market access is expected to climb to roughly 10% of Canada’s dairy production.¹⁰ In return, Canada has expanded market access for dairy, poultry and eggs in these markets. Canada has a small production base with supply-chain logistics and relationships designed for domestic markets, which makes Canadian supply managed industries ill-equipped to be leaders in global markets where high volumes at competitive prices are critical for success.

Domestic supply chains are helping shield Canadians from trade wars: In times of global disruption, the domestic food supply chain has served Canadians well. Take the made-in-Canada movement that was kickstarted by U.S. President Donald Trump’s trade war. It drove down sales of American brands, with Canadians swapping them with domestic products, wherever possible. For dairy, poultry, and eggs, Canadians can remain especially confident they have immediate access to Canada-based supply chains.

Eliminating loopholes

Processed products such as prepared meals can blur the lines of which food products are traded under which HS code, which categorize the trade of goods and services.
These blurred lines have allowed importers to move products into Canada tariff-free, taking advantage of loopholes that sidestep Canada’s TRQ system, which sets the volume allotted to importers under free trade agreements, including CUSMA, CETA and CPTPP.
Some of these loopholes have been closed, such as cheese being imported tariff-free when it was classified as part of a prepared meal like pizza-making kits for restaurants, which fell outside of TRQ allotments. Other loopholes have yet to be closed such as spent fowl (i.e., old laying hens) which can be used as a category to trade misrepresented broiler chicken raised for meat consumption, to avoid paying Canadian duties.
While importers have TRQ allotments for dairy, egg and poultry products, this low-tariff pathway to Canada is often underutilized as Canadian processors control the majority of TRQs as well as earmarked space in grocery store shelves.
This underutilization of TRQs has been a mounting irritant between Canada and its trading partners, most notably by the Americans who say Canada has not “respected the spirit” of CUSMA, and made it challenging for their producers to access Canada’s market.

Stability

Supply management is synonymous with stability. But, at what cost and for whom? With global market disruptions on the rise, it’s critical to determine a pathway that benefits both Canadian farmers and consumers.

Canada-based food supply chains have distinguished themselves during the pandemic and other crises, such as the recent avian influenza outbreak that’s ravaged the U.S. industry.

Indeed, egg prices in the U.S. have skyrocketed over the past year as the flu takes its toll on animal production, with 174 million confirmed poultry cases, and more than 1,074 dairy cow herds impacted in the U.S. by July 2025.¹¹

The impact has been far less severe in Canada, with roughly 14 million birds infected and no reported cases among dairy herds.¹² Canada’s poultry, egg and dairy farms have also been more resilient because of the industry’s standards in biosecurity and animal welfare. Smaller scale production that’s more dispersed compared to U.S. farms (aside from production-dense areas such as the Fraser Valley in British Columbia) has also helped. These on-farm factors have knock-on effects for stability in consumer pricing and product availability. On average, between 2017 and 2025, a dozen eggs sold in Canada was $1 more than in the U.S. However, that had flipped by February 2025 when a dozen eggs in the U.S. cost $3.52 dollars more than in Canada.^{13 14}

Supply chain and market disruptions are anticipated to intensify from several issues, including a global movement away from rules-based trade and climate change triggering extreme weather events and spreading disease and pest outbreaks. It’s an important consideration for policymakers as frequent volatility impacts commodity market prices.

Producing food is a costly affair. Fixed quota and price in supply managed sectors generate certainty for farmers, which fosters stability in the supply chain. However, this stability comes with its own cost as it inherently leads to more expensive products as the cost of inputs rise in Canada. Worsening affordability disproportionally impacts food insecurity in low-income families; however significant price volatility is disruptive to average household spending, too.^{15 16}

In contrast, non-supply managed farmers growing wheat and raising beef cattle, for example, are exposed to commodity markets, resulting in farmers’ profit margins and consumer prices fluctuating as markets shift. Non-supply managed farmers are often price receivers and cannot pass rising costs onto consumers.

Canada’s support for farms is contentious—but comparable to the U.S. When comparing total direct producer supports, U.S. contributions are 6.5 times larger than Canada’s. Yet, the countries are roughly at par when estimating direct producer supports as a portion of value produced at the farmgate–around 7%.¹⁷ However, this support is not evenly distributed across all commodities. Specific to supply managed products, producer supports are clearly aligned with the respective countries’ approach. Canada’s contribution has been consistent with the price producers receive based on supply management, while U.S. farmer supports fluctuate in line with market volatility.

Supply managed farms contribute to Canada’s rural economy prosperity. Stability also plays a broader role in Canada’s rural economy. The most recent agriculture census data, shows the number of Canadian dairy farms fell 11% while herd size rose 13% over a five-year period (2016–2021).¹⁸ In the U.S., the number of dairy farms decreased by 34% and herd size increased by 48% over the same period.¹⁹ Consolidation enables larger dairy farms in the U.S. to achieve economies of scale. Yet, this recent rapid trend of fewer, bigger farms in the U.S. reduces the diversity of farm sizes, concentrates herd locations, making them more susceptible to disease and pest outbreaks, and can hollow out demand for supporting businesses and rural communities.

Standards

Canada’s supply management allows for a system that adheres to high standards, leading to greater efficiency and sustainability outcomes. However, the system is not designed to maximize production.

Canadian farmers are increasingly ramping up their capabilities to measure, report and verify their progress in adopting best management practices, especially those related to environmental sustainability and animal welfare. The strong governance and market control of supply management allows for widespread and consistent adoption of practices and standards at the farm and along the supply chain. To participate in the regulated market, supply managed farms adhere to an industry code of practice and regulated standards, which has raised Canada’s standards for animal welfare and health and food quality. Non-supply managed production systems in Canada such as beef also have quality assurance programs that ensure high standards on farms such as the Ontario Corn Fed Beef Quality Assurance Program. Yet, the governance system of supply management enables widespread and consistent adoption of practices—an ambition that’s challenging to achieve when there is less regulation and market control.

More stringent standards than the U.S. Nonetheless, on both sides of the border, milk is safe and produced to a high standard. ProAction is the Dairy Farmers of Canada’s framework for best management practices and standards across six themes: milk quality, food safety, traceability, biosecurity, animal care and the environment—with 99.7% of Canadian dairy farmers registered.²⁰ Similarly, the U.S. has the National Dairy Farmers Assuring Responsible Management (FARM), which covers 99% of the U.S. milk supply.²¹ However, standards within these two programs and the complementary regulations differ, which can impact animal health and milk quality. The U.S. also allows for a higher Somatic Cell Count (SCC), which counts white blood cells in cows. Similar to humans, high white blood cells mean the body is fighting an illness or inflammation, which could negatively impact milk quality. Somatic Cell Count in the U.S. is 750,000 individual cells (IC) per millilitre (mL), while in Canada stands at 400,000 IC per mL.^{22 23}

Industry is focused on efficiency and sustainability. The governance frameworks of supply management also provide a platform to scale farmer engagement in industry-wide initiatives on issues such as efficiency, innovation and sustainability. For example, egg farmers across Canada are measuring and reporting their progress on sustainability through the National Environmental Sustainability and Technology Tool (NESTT) platform. This unified approach sidesteps the increasingly fragmented landscape of sustainability and regenerative agriculture projects that many farmers are navigating for market access or to develop new revenue streams through mechanisms such as carbon credits and green premiums.

Global dairy lessons: How other markets are navigating transition and disruption

Food security and sovereignty are featuring high on government agendas globally as extreme weather interrupts food production and trade barriers disrupt trade flows.

Dairy, a nutrient and culturally significant staple in many diets around the world—from French cheese to lassi in India—, has high demand but also high volatility in international markets, resulting in the industry attracting elevated attention in policy, trade, and farmer support.

Here’s how other countries are managing their dairy sector during times of transition and disruption.

New Zealand: An international leader with a rising GHG footprint

New Zealand removed its production quota in the 1980s due to a budget crisis, transforming the country into the world’s largest dairy exporter. In 2001, the government launched Fonterra, a farmers’ co-op, which sets prices and is now the largest purchaser of domestic milk. Its price calculation is based on revenue from milk sales minus operating and overhead costs and capital recovery. New Zealand has more than doubled its national herd since the early 1980s, and individual herd sizes increased three-fold. Consolidation meant the number of herds fell from 15,753 in 1985 to 10,485 in 2024.²⁴ Market liberalization has transformed the New Zealand dairy supply chain, especially powder milk production, which has grown 237% in volume since 2000, driven by free trade agreements with large importers such as China and targeted foreign and domestic investment in building capacity and automating manufacturing processes.²⁵

The dairy sector has become highly efficient and competitive, as demonstrated by its herd consolidation, but the growth in the number of cows has raised the sector’s environmental impacts, such as greenhouse gas emissions (GHG). Led by dairy, agriculture now accounts for over 50% of New Zealand’s GHG emissions.²⁶ Recent national GHG targets have created uncertainty in the sector, resulting in a review of national targets and agriculture’s role in meeting them. AgriZero, a public-private partnership, is focused on matching funds and accelerating climate action in agriculture. It’s seen as a unique model to stack funds at a time when attention on climate mitigation has slowed down.

Lesson for Canada: A first of its kind, AgriZero serves as an example for Canada to explore as pools of climate funds shrink and the need for coordinated, scaled action in agriculture grows.

United Kingdom: Transitioning away from the EU model

The U.K. is transitioning its policy approach to area-based subsides under the Environmental Land Management Schemes (ELMS) post-Brexit that’s underpinned by sustainable agriculture such as marginal land rehabilitation. Dairy producers in the U.K. received direct payments under the EU’s Common Agriculture Policy (CAP), but these types of payments are being phased out until 2028, as part of the U.K. departure from the economic bloc. This transition in farmer support imposes both financial and administrative burdens on the sector as farmers navigate change, amid rising costs of domestic production and competition from importers.

To enable greater agri-food trade among E.U. countries and the U.K., the two have agreed to move forward with establishing a common Sanitary and Phytosanitary area (i.e., shared standards on food safety and quality) that aims to ease the movement of agriculture and food products across the U.K. and EU. However, some say that the move could impact the U.K.’s ability to form trade agreements with countries outside of the E.U. and maintains the U.K.’s ties to the economic region.

Lesson for Canada: As Canada embarks on a mission to strengthen and diverse its international trade, it might avoid going from an over-reliance on the U.S. to over-indexing to another region or country via overly restrictive standard alignment of agri-food products for trade.

Brazil: The struggle to break into the global market despite high ambition

Brazil has transformed its agriculture sector and is now a leader in global agri-food exports—the second largest in the world, after the U.S. Yet, less than 1% of Brazil’s dairy production is exported.²⁷ Domestic demand, market infrastructure that’s not export-oriented, and a highly competitive international market has impeded Brazil’s global push.

The country’s dairy production and processing infrastructure greatly varies from smallholder, subsistence farms to modern, large-scale farm businesses. The former is supported through subsidies for asset investments such as cooling tanks, pasture, and milking infrastructure. Farmer prices are mostly market-driven, but the government may intervene via CONAB (National Supply Company) to buy excess milk or offer storage subsidies.

With ambitions to break into the global market in a big way, Brazil is up against tough competition, notably from New Zealand, as it eyes the Middle East, Latin American and Asian markets. To grow globally, Brazil must also address its weaker standard and regulatory approach to land use, GHG emissions, traceability and cold-chain logistics.

Lesson for Canada: While Brazil and Canada have had different agri-food development trajectories to date, they are increasingly competing for the same piece of the global agri-food export pie. Brazil’s approach to enabling diverse scales of production, targeted at both domestic and export growth, should prompt Canada to investigate its own production, which continues to consolidate and faces rising foreign competition.

Market Outlook

Canada’s supply management systems is designed to protect the country from changes in international markets. Yet, policymakers still need to be alert to structural shifts and macro trends in the global industry.

Dairy

Real global dairy prices for farmers are projected to trend downward within this decade. But, relative to input costs, prices are expected to rise, especially as milk produced per animal grows.²⁸ U.S. farmers could see an average annual drop of 8% year-over-year in real price, signalling lower returns for dairy farms in commodity markets that do not innovate and grow.²⁹
Global dairy consumption is expected to modestly increase 1% per year, while production is projected to grow at 1.6% per year to 1,085 million tonnes, driven by production in India, Pakistan and Sub-Saharan Africa, primarily for their domestic consumption.³⁰
Fresh dairy consumption in North America and Europe are stable or declining as consumers move away from full-fat milk and cream, and plant-based alternatives such as oat milk mature as an established replacement. Processed dairy consumption, including butter and powder milks are on the rise driven by their use in food manufacturing, including infant formula and baked goods. Finally, cheese consumption, which is closely connected to household income has been on the rise in growing international markets such as Mexico, the U.S., Brazil and Saudia Arabia.³¹
Only 7% of global milk production is traded internationally due to its perishability and as market infrastructure in many countries is primarily designed for domestic or regional distribution with few exceptions, such as New Zealand and Ireland. However, over 50% of milk powder, including whole and skim products, are traded.³²
World dairy trade is expected to grow by more than 12% over the next eight years. Skim milk powder from the U.S. and cheese from the E.U., two of the largest dairy export segments, are poised for the highest growth.³³

Poultry and eggs

Global prices for poultry and eggs are projected to decline as inflation and input costs fall. For example, U.S. farm prices per dozen of eggs are projected to decline by US$0.90 over the next decade, with an average year-over-year decline of 4%.³⁴ However, U.S. production is expected to rise 12% by 2033, from a 2022 baseline.
Poultry production is expected to increase with growing demand, and account for nearly half of all meat produced. Global poultry consumption is expected to grow 16% over the next decade—the most among animal proteins. Poultry is projected to account for 43% of animal protein consumed by 2034, with notable growth in Brazil, Europe, and the U.S.³⁵
China’s self-sustaining food policy and recent rebound from African swine fever and avian influenza outbreaks has resulted in a decline in global meat trade from its height in 2021, when China accounted for roughly a quarter of global meat imports.
Population and GDP growth in Africa and Asia are expected to rebound meat exports within the next decade, driven by poultry which is expected to account for over 40% of total meat imports.³⁶

Contributors:

Lead author

Lisa Ashton – Director, Agriculture Policy

Editor

Yadullah Hussain – Managing Editor

Design and production

Caprice Biasoni – Graphic Design Specialist

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Statistics Canada.

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Dairy Processors Association of Canada. Canada-United States-Mexico Agreement (CUSMA).

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U.S. Centers for Disease Control and Prevention. Avian Influenza (Bird Flu), 2025.

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Canadian Food Inspection Agency (CFIA). Status of ongoing avian influenza response by province, 2025.

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Statistics Canada. Monthly average retail prices for selected products, 2025.

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U.S. Bureau of Labor Statistics. Consumer Price Index – Average price data, 2025.

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Statistics Canada. Household spending by household income quintile, Canada, regions and provinces, 2025.

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Organisation for Economic Co-operation and Development (OECD). Agricultural policy monitoring, 2024.

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Statistics Canada. Number of cattle, by class and farm type (x 1,000), 2025.

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United States Department of Agriculture, National Statistic Services (USDA NASS) 2022 Census of Agriculture, 2024.

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Farmers Assuring Responsible Management (FARM).Animal Care, 2025.

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Food and Agriculture Organization, United Nations (FAO). Dairy Market Review: Overview of global market developments in 2024, 2025.

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OECD and FAO. OECD-FAO Agricultural Outlook 2024-2033, 2024.

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USDA Economic Research Service. USDA Agricultural Projections to 2034, 2025.

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In this week’s edition: Prime Minister Mark Carney has marked his own red circle in the calendar: July 21; and what the latest trade data tells us about Canada’s export diversification strategy

After Independence Day comes Liberation Day 2.0

Happy 249^th Birthday, America! Enjoy the fireworks over the long weekend, but markets are bracing for the more consequential American spectacle on July 9 when the 90-day pause on Liberation Day tariffs comes to an end. Will there be more pyrotechnics or a fizzle out?

The White House’s “90 deals in 90 days” ambition has turned into two American humble-pie, kinda partial deals with the U.K. and China, and another with Vietnam this week.
Will President Donald Trump extend the ceasefire, or will he launch a fresh volley of tariffs against allies like Japan, the EU and Canada?

“About 10 to 12 countries are very close to a deal,” said Joseph Lavorgna, an advisor to U.S. Treasury Secretary Scott Bessent, with another 20 negotiating in good faith. “And Secretary Bassett highlighted that many deals could be done by Labor Day.” Is that a tell that the administration is looking to push past July 9? Who knows.

While Canada has an eye on that date, Prime Minister Carney has marked his own red circle in the calendar: the July 21 deadline to conclude a security and economic deal with the U.S. To facilitate talks, Ottawa scrapped its digital services tax on Big Tech, which was an irritant to President Trump. Canada is now back in the “front of the line” in trade negotiations, assured Pete Hoekstra, U.S. Ambassador to Canada.

Strategically, it’s an open question if Canada is better off rushing to negotiate a bilateral deal with the U.S. or defer until the autumn. In such serial negotiations, first movers often set the pattern, so there may be an advantage to rush a deal with Trump. On the other hand, the president desperately wants the Federal Reserve to cut interest rates, which would lower interest payments on America’s ballooning public debt, lower debt-servicing costs and galvanize economic activity. Jerome Powell, Chairman of the Federal Reserve, is holding firm on rate cuts until the trade turmoil settles down. Come autumn, we will be in a countdown to midterm elections, which will put pressure on Trump to rev up America’s economic engine. Canada may be better off waiting until public pressure on Trump mounts. That is, if its own trade and economic data holds up.

While Trump recently said his administration has “all the cards” in its negotiations with Ottawa, Carney has a few aces up his sleeve, too.

Energy. Oil, natural gas, and electricity, etc.—Canada has it in abundance. The U.S. needs them all to help power its data centres and, presumably, an industrial revival.
Uranium. Canada, the world’s second largest producerof uranium,would need to figure prominently to power Trump’s plan to start construction of 10 large nuclear reactors by 2030, and expand U.S. nuclear energy from 100 gigawatt currently to 400GW by 2050.
Big Tech. Ottawa has just pulled its 3% digital services tax (that’s $3 billion in forgone revenue), gaining goodwill while keeping the option to re‑table it if talks stall.
Critical minerals. Canada produces or refines 21 of the 50 U.S.‑listed critical minerals—developing capacity at Saskatchewan’s new rare‑earth plant and Ontario’s Ring of Fire are poised to cement Canadian leadership in responsible critical minerals.
Counter‑firepower. A choice of last resort given potential costs for Canadian businesses, Finance Canada can mirror U.S. moves with tariffs on up to $155 billion of U.S. goods—a list was already drafted in February.
Friend‑shoring pitch. A bilateral supply‑chain roadmap under previous administrations argue deeper North‑American integration—EV batteries, semiconductors, green steel—as the surest hedge against both Chinese dominance and tariff chaos.
Supply management. Some agriculture and dairy concessions may be on the table as a compromise, as Ottawa finds a balance between appeasing Washington without upsetting the domestic audience.

The week that was

The Great Canadian booze boycott sent imports of U.S. alcohol plummeting 94% year-on-year to just $3 million in April. Some U.S. officials see removal of the boycott as part of the trade deal.
Ottawa scrapped all 53 federal exemptions in the Canadian Free Trade Agreement that were impeding interprovincial trade, just in time for Canada Day. Good, now dismantle the patchwork of provincial barriers, the Canadian Federation of Independent Businesses recommends.
Republicans killed the “revenge tax” from the so-called Big, Beautiful bill that passed yesterday. It was scrapped after G7 countries agreed to exempt the U.S. from an OECD-proposed global minimum tax—raising questions about the pact’s global-ness.
Speaking of free passes, the EU is proposing to exempt its steel and other heavy industries from its carbon border tax exports in the face of competition from foreign rivals.
Global LNG vessel deliveries shot up 60% to 67 units last year, taking the global fleet to 831, as LNG trade booms. Another 103 vessels are set to be delivered this year.

The big number

10.8%

Windsor’s unemployment rate in May, as Ontario’s key auto-assembly hub reels from U.S. tariffs. The province’s overall unemployment rate stands at 7.9%.

Current trade sentiment: Diversify—and dread

Canada is recalibrating its international trade flows in response to U.S. tariffs, new Statistics Canada data shows. Following heavy drops in exports in April, there are some signs of a shift, but the outlook remains uncertain for Canadian industries. Most of the strategic sectors—iron, aluminum, lumber and pharmaceuticals—, that Trump has marked as strategic to the U.S. economy, saw declines.

On the bright side, exports edged up: Canada’s record $7.6 billion merchandise trade deficit in April narrowed to $5.9 billion in May, with overall exports up 1.1%, led by gold. Imports fell 1.6%.
But U.S.-bound trade continued to shrink. Tariff-induced declines in Canadian exports continued a four-month decline, dropping 0.9% in May.
The diversification drive is on. Canada is beginning to increase its exports to non-U.S. markets, which rose 5.7% in May—a record.
Tariff-hit sectors bore the brunt. May saw little relief among key sectors, following major export reductions in April. Exports of unwrought iron, steel, and aluminum alloys and products dropped 4.9% since April. Exports of lumber and sawmill products also declined 2.2%, while pharmaceutical fell 0.5%. However, motor vehicles and part exports rose 0.9%.
Lumber is staring down the barrel of steeper duties. Canadian softwood lumber exports to the U.S. could see duties jumping from 14.5% to 34.45% in July, unless a deal can be hashed out.

CEOs of auto manufacturers met with Carney this week to discuss ways to protect the auto supply chains from the trade war, and diversify trade relationships. And while Canada’s imposition of temporary tariff-rate quotas on steel mill products could provide short-term relief to domestic producers, several industries await more trade clarity.

Also read: $125B Exposed: What’s at risk for Canada as Trump eyes 5 strategic sectors

Final Word

Canada is a “very difficult country to TRADE with, including the fact that they have charged our Farmers as much as 400% Tariffs, for years, on Dairy Products,”—U.S. President Donald Trump, as he takes aim at Canada’s supply management system.

Oh Canada, we’ve got ourselves a deal

At long last, and just in time for Canada Day, the federal government is taking steps to tear down interprovincial trade barriers.
Bill C-5, the Free Trade and Labour Mobility in Canada Act, has become law. And while removing federal barriers to interprovincial trade is a positive step, history suggests obstacles will remain.
‘Special interests’ groups will mobilize behind the scenes to secure carve-outs from the legislation, which may undermine its effectiveness.
More challenging still is the commercial reality on the ground. As Canada’s experience in free trade shows, the mere lowering of tariff walls does not automatically boost trade flows. Canada liberalized trade with Europe and Asia, for example, but Canadian exports to these regions have not meaningfully increased.
So can we expect to see more Okanagan Riesling on shelves east of the Rockies? It’s probably too early to pop the cork and celebrate that victory.
Statistics Canada data shows that Canadians trade less with each other than they do with the rest of the world, in percentage terms. In the ’80’s, roughly half of Canada’s total trade was interprovincial. Following a series of FTAs, that proportion has dipped closer to a third.
Internal barriers may help explain why trade between provinces has lagged trade with the wider world. RBC Economics concluded earlier this year that estimates may differ about the economic gains associated with reducing internal trade barriers, but what seems certain is that free trade among the provinces is a pro-growth policy—particularly for the smaller provinces.

The week that was

In addition to having her term as Canada’s Ambassador to the U.S. extended, Kirsten Hillman was named Canada’s chief negotiator in trade talks with the U.S.
Complaints from U.S. manufacturers that China was limiting the release of rare-earth elements despite its trade truce with Washington prompted Beijing to promise on Friday that it would approve U.S applications. This comes a day after Trump announced that the U.S. and China had “just signed” a deal.
The U.K. unveiled a broader trade strategy focused on its £500 billion a year service exports sector and the desire to land deals with a range of partners, including the six-member Gulf Cooperation Council.
Trump threatened Spain with increased tariffs, after Spanish Prime Minister Pedro Sánchez rejected NATO’s new target of spending 5% of GDP on defence.
Donald Trump, at the urging of oil executives, is pushing to rollback climate laws as part of U.S.-EU trade negotiations.

The big number

US$179.2 billion

Total value of U.S. exports in May, down 5.2% versus April – that’s the sharpest month-over-month decline since 2000

Global oil and gas trade just got risky—again

As Iran and Israel traded missiles and the U.S. bombed three of Tehran’s nuclear facilities, oil tanker rate premiums spiked 83%. And with major LNG exporter Qatar briefly getting ensnared in the crisis, another element of risk was added to the global oil and gas trade.

While oil tanker rates cooled off a couple days after the ceasefire, this volatility could remain a perennial issue hovering over global commodity production—and prices. Meanwhile, LNG tanker rates, due to re-routing and summer demand, remain elevated. By 2030, almost 25% of global LNG flows are expected to pass through the Strait of Hormuz, a critical oil and gas channel in the Middle East, based on Rystad data.

Canada has an opportunity to help de-risk global supply from both a geopolitical and a concentration of supply standpoint—a proposition valued by European and Asian buyers, as we highlighted in our recent report A G7+ Strategy for Natural Gas: Four Scenarios for Energy Security in the 2040s.

And Canada would soon become a bona fide member of the LNG exporters club.This weekend, LNG Canada awaits the arrival of likely two LNG carriers, including Puteri Sejinjang, a new 174,000-cubic-metre carrier, to pick up the first-ever shipment of gas from the West Coast facility.

Final Word

“Our strategic response to this new world can’t be based on nostalgia or post-imperial delusion, let alone any ideological or dogmatic attachment to one trading bloc or another.”
–Douglas Alexander, U.K.’s Trade Minister

In this week’s edition: A critical minerals action plan, why trade diversification may not be a silver bullet and how tariffs are making food insecurity even worse

Noteworthy

By John Stackhouse

Mark Carney got out of the G7 alive. The Kananaskis summit could have been a trade wreck, but Donald Trump clearly had other things on his mind. That doesn’t mean Canada, or any of the other summiteers, can claim victory. Here’s why, and some of what we’re hearing:

There was never going to be a Canada-U.S. agreement at the G7, for one simple reason: DJT was not going to announce something so important to his domestic agenda on foreign soil (unless, of course, he planted the Stars and Stripes with it.)
The ensuing suggestion of a 30-day window for a deal is aspirational. Anyone who has dealt with Trump knows he doesn’t stick to deadlines, and he uses time as a negotiating tool. That means don’t settle if you don’t have to. And now, the Carney team’s biggest concern is playing out, as POTUS gets distracted by events. A Middle East war, for instance.
Some on the Canadian side don’t mind that, thinking that a “rag the puck” strategy allows Canada to get to a fuller USMCA conversation in the fall.
But still other Canadians fear the worsening impact of countervailing tariffs. “Elbows up” sounds fine, until you elbow someone on your own team. Plain + simple: Canada is suffering more from the tariff war than the U.S. right now.
And the longer the uncertainty goes on, the more challenging it will be for Canada to attract investment.
Longer term, Canada remains in the crosshairs of Trump’s sectoral studies, which will only make it harder for our exports in his Core 5 categories: autos, steel/aluminum, lumber, pharmaceuticals and semiconductors.
As someone put it to Trade Zone: “When your negotiating partner is willing to be far more ruthless, you’re not in a good negotiating position.”

The week that was

The U.S. and Canada are looking to secure a deal within 30 days. If they can’t, Carney said, Canada will impose counter-tariffs.
Canada is cracking down on the dumping of cheap foreign steel to support domestic steel producers getting hammered by Trump’s 50% tariffs.
The volume of commercial trucks crossing into the U.S. from Canada is down more than 10% in each of the past two months compared to 2024. Meanwhile, trucks from Mexico to the U.S. were only down 2.8% in May (and 6.4% lower in April).
The U.K.’s Business Secretary said that efforts to get relief for steel exports to the U.S. will be wrapped into broader tariff negotiations, indicating that there is still a ways to go on the recently announced trade deal between the U.S. and U.K.
The U.S. Fed held rates steady and said it will watch the impact of tariffs closely this summer.
Housing starts in the U.S. hit a five-year low in May as tariffs hit imported construction materials.
Despite tariffs effectively shutting the U.S. out as a destination for its goods, China increased its overall trade surplus to US$500 billion so far this year—that’s up 40% YoY.

Minerals on the G7’s mind

G7 leaders unveiled a Critical Minerals Action Plan this week to counter non-market distortions, increase supply chain transparency, and reduce strategic dependency on Beijing. While light on specifics, some key items aligned with our report, The New Great Game:

Limit price distortions: G7 members committed to coordinated responses to supply disruptions and pledged improved market transparency and traceability. No explicit mention of a “China premium” or minimum price floor, as we noted, but positive developments, nonetheless.
Unlock financing: Encourage development banks, export credit agencies, and private capital to accelerate upstream investment in G7 countries and emerging market allies.
Supply-chain traceability, standard-setting and sustainability: A G7 roadmap due by year-end to create benchmarks to ensure responsible mining, environmental safeguards and labour standards.

Canada remains positioned as a central actor in mineral resources, with the potential to serve the growing needs of European and U.S. defence and new energy mineral needs—a natural advantage in trade talks with the U.S. and partners. Further efforts to strengthen the remainder of the value chain—building out refining capacity, for example—will complement Canada’s resource advantage.

Why trade diversification may not be a silver bullet

Diversifying trade partners, in the wake of the current trade war with the U.S., has become a hot topic. But while lowering tariff barriers is sound economics, this alone may not lead to higher export volumes.

The Harper conservatives pursued bilateral trade agreements with a range of countries and economic blocs, including Europe (CETA), Asia-Pacific (CPTPP), and a host of Latin American countries. And yet, just 4% of Canadian exports are EU-bound and 6% are shipped to CPTPP countries—ratios that remain unmoved over two decades.

Meanwhile, nearly 80% of Canadian exports are sent to the U.S. Canada’s reliance on a few key industries—energy, automotive and metals—further entrenches this dependence. Canada needs an integrated trade strategy that diversifies trading partners while boosting export competitiveness. And it makes the Carney-Trump 30-day deal deadline all the more important.

A trade war on food security

One in four Canadians are experiencing food insecurity—a level never seen before in this country. It’s an issue of affordability, and one that tariffs and the ongoing trade uncertainty, threatens to make worse.

Job loss and insecurity is forcing many to make difficult choices: Between January and May, Canada’s manufacturing sector lost 54,000 jobs and the country’s unemployment rate rose to 7%, the highest it’s been since 2016, excluding the pandemic.
Rising cost of living threatens to further deepen the food insecurity crisis. But it’s more than about jobs—over 60% of food-insecure households rely on wages or self-employment income to support themselves.
Supply chain disruptions impact food consistency and costs: In the U.S., tariffs are estimated to increase food prices by 2.6% in the short run, disproportionately impacting fruit and vegetables, that are expected to rise 5.4%.

In our latest report–Feeding the Crisis: The Tariff Toll on Food Insecurity–we lay out three potential solutions, all linked to Canada’s growth ambitions.

The Final Word

“If the current tariffs and counter-tariffs remain in place, past experience suggests pass through of about 75% of the costs of tariffs over roughly a year and a half.”
–Bank of Canada Governor Tiff Macklem during a speech this week in St. John’s, Newfoundland.

The past few years have been incredibly hard for many Canadians. The pandemic caused massive disruptions to the job market and the highest rates of inflation in decades, which was intensified by the war in Ukraine. And now comes a trade war with the U.S., with its own set of shockwaves, including job losses and supply-chain upheaval, sending the price of goods even higher. Many can’t keep up.

Today, one in four Canadians are experiencing food insecurity. That’s 10 million people—a level never seen before in this country.¹ Ultimately, it’s an issue of affordability. There is an abundance of food available. But for an increasing number, it’s out of reach. In March 2024, more than two million visits were recorded at Canadian food banks. That’s a 90% increase in just five years.² And food banks are a last resort, signalling how dire things have become. Properly supporting and resourcing food banks is critical. However, addressing food insecurity longer term, relies on building a stronger Canadian economy. This includes addressing the affordability crisis, improving productivity, and advancing durable economic development in Canada’s rural and remote areas.

Poverty and food insecurity rates are rising in Canada

Trade war on food: Rising job loss, costs, and disruptions

Job loss and insecurity is forcing many to make difficult choices

U.S. President Donald Trump’s trade war has caused widespread uncertainty. Launches have been delayed. Production has been paused. Layoffs have been announced. Between January and May, Canada’s manufacturing sector lost 54,000 jobs and the country’s unemployment rate rose to 7%, the highest it’s been since 2016, excluding the pandemic.^{3 4} Trade exposed industries, including manufacturing, continue to scale down jobs, and now there is greater uncertainty in steel and aluminum jobs with Trump’s 50% tariff on the industry. All this volatility can leave workers in precarious financial situations.

The average Canadian household spent about $76,750 on goods and services in 2023, with 15% and 32% of their money spent on food and shelter, respectively. The lowest income quintile spent $40,080 annually—nearly half that of the average household—with 18% spent on food and 35% on shelter.⁵ In the event of a job loss—or the fear of potential layoff—Canadians in higher income brackets can cut spending on discretionary items (e.g., new clothes, meals out) in the short term. Lower-income households don’t have that luxury and are left with difficult choices between what basic needs—utility bills, medication, food—they’ll cover. These choices can also impact the quality of food purchased, with lower income households opting for cheaper, lower-nutrient-rich foods.⁶

Like downturns in the job market, swings in international commodity markets impacted by tariff wars can impact Canadians whose income is directly tied to market prices. Farmers are often price receivers—unable to pass rising costs onto buyers and consumers. And China’s tariffs on agri-food products including canola oil and seafood have recently taken a toll on Canada’s rural economy. Nova Scotia is thought to be the hardest hit by China’s 25% duties on aquatic products, which represented 9.2% of the provinces total export value in 2024. Farmers and fisherpersons are familiar with volatility in the marketplace from bad weather to shifts in demand. Still, ongoing disruptions can erode stability in rural and remote regions that are already at a disadvantage in accessing economic opportunities and services.

And the impact of tariffs is not just about job security. Windsor, Ontario, for example, is reliant on automotive and advanced manufacturing, food processing, and grains and oilseed handling and shipping. This exposes the entire city and surrounding area to Trump’s tariffs on auto as well as China’s retaliatory tariffs on Canada’s agri-food products. Unemployment in Windsor is higher than the national average at 10.8% in May 2025, up from 7.8% in May 2024.⁷ And the knock-on effects from multiple pressures on employment within a region and rising costs of living can trickle down to local retail and services. As consumer spending tightens, all sectors and their workers are impacted.

Rising cost of living threatens to further deepen the food insecurity crisis.

With rising costs in Canada, a job is no longer a precursor for meeting basic needs. More than 60% of Canada’s food-insecure households rely on wages, salaries, or self-employment income as their primary source of income.⁸ Workers experiencing moderate to severe food insecurity often occupy low-wage or precarious jobs that are not keeping pace with the cost of living. Visible minorities, women and new immigrants in Canada earn less than the national average. As a result, food insecurity is disproportionality experienced by these groups. More than 46% of black households and 39% of the Indigenous population living off-reserve are food insecure.⁹ Single-mother households also have higher rates of food insecurity at 52%.¹⁰

The effects of food insecurity further marginalize vulnerable groups. Food insecurity is associated with higher rates of chronic diseases, including diabetes and cardiovascular disease. This means more visits to the doctor’s office and the hospital. Severely food insecure Canadians incur health costs that are more than double those who are food secure.¹¹ Food insecurity also impacts the physical and mental development of children, as well as academic performance and behaviour.¹² These impacts underline the health and socio-economic costs to families and the Canadian economy.

Over the past five years, the affordability crisis has been acutely experienced by households whose wages are not keeping pace with the rising price of goods and services. With pre-tariff inventory coming off grocery store shelves, tariffs are starting to intensify the unaffordability of products in Canada, especially food. Since January 2025, food prices have been a notable driving factor growing the Canadian Consumer Price Index. In April 2025, food prices increased by 3.8% from last year.

Supply chain disruptions impact food consistency and costs

Food companies and retailers reported loses in the first quarter—a direct result of the tariff wars.¹³ On top of mitigating losses, Canada-U.S. agri-food supply chains are now tasked with additional administrative demands in proving the Canada-United States-Mexico (CUSMA) trade agreement compliance as only two-thirds of Canada’s agri-food exports in 2024 were traded under CUSMA. These stacking complexities and added costs cannot only be absorbed by agri-food suppliers, wholesalers, and retailers, who often operate on thin margins. Eventually rising costs are passed onto the consumer. In the U.S., the impact of tariffs is estimated to increase food prices by 2.6% in the short run, disproportionately impacting fruit and vegetables, that are expected to rise 5.4%.¹⁴

Trade wars have sparked a diversification movement. And while trade diversification is a strategy to grow and strengthen Canada’s agri-food exports, it can also result in trade-offs such as short-term uncertainty in quality and cost for consumers while supply chains are being established. Stability and consistency in trade is a key factor in keeping transportation, logistics and operational costs down for traders, wholesalers and retailer, which helps ensure consumers have consistency in price, quality, and availability. Now, uncertainty from tariffs jeopardizes these benefits that North American consumers have become accustomed to through Canada and the U.S.’s interconnected supply chains.

The next step: Tying food solutions to Canada’s growth ambitions

Solutions to food insecurity in Canada are well documented but the issue remains on the sidelines when it comes to large-scale policy and funding commitments.

Potential solutions include:

Address the disparity between Canada’s rural and urban as it relates to access to resources, living wages, and economic development opportunities.
Rebuild Canada’s social safety net to better support low-income households and proactively respond when a household has lost income or has experienced a disruption that impacts its budget.
Improve the affordability of housing.

A food security target may be the catalyst needed to pull these solutions together to drive action across Canada and track progress. This is not a new idea. Food security experts in Canada have called for a 50% target by 2030.^{15 16} But now is the time to implement a bold vision for food security in Canada as the country sets out to build back a better economy. A key challenge is identifying where food security solutions can be aligned with existing landmark commitments to build momentum. A food secure plan for Canada must also consider how it proportionally improves rates in regions and among groups that are the worst impacted.

Food insecurity rates are exceptionally high in Canada's north

Expedite the development of rural and remote community and health services alongside efforts to expedite Canada’s major infrastructure projects. Canada’s ambitions to accelerate major infrastructure projects from the Port of Churchill to the Ring of Fire are primarily concentrated in northern rural and remote Canada. Canada’s rural and remote areas account for 25% of Canada’s GDP but are grossly underserviced when it comes to health care, housing, and other basic needs, including access to healthy food.¹⁷ Food insecurity is high across Canada but is highest in northern and remote areas. More than 58% of people in Nunavut experience food insecurity. Further, only 7% of doctors work in rural areas despite the fact Canada’s rural population accounts for 18% of the total population.¹⁸

Much of Canada’s plans to build its economic security and sovereignty hinges on having a productive workforce in rural and remote Canada. But getting people to stay in rural and remote areas or relocate for these projects is a tough sell if they can’t access resources needed for their families to lead a healthy life. Canada can help flip the trend of urban areas growing 15 times faster than rural by mitigating brain and resource drain through investments in community resources including access to healthcare, food and housing that match the ambitions of major infrastructure projects.¹⁹

Improving access to household financial supports and benefits through policy reform. It is especially timely to advance such reform efforts as the Liberal government has committed to review and reform the process of applying for the Disability Tax Credit (DTC). The DTC is the gateway to key federal programs, including the Canada Disability Benefit, the Canada Child Benefit for children with disabilities, and the dental benefit. This review process is an opportunity to engage Canada’s network of food banks servicing families that rely on DTC benefit to develop practical solutions that work for households, especially those experiencing housing and food insecurity.

On top of qualifying for benefits, Canada’s most vulnerable groups, including those with disabilities and houseless people, are often the hardest to reach populations for tax returns, and have filing rates below Canada’s national average of 92%.²⁰ Unfiled taxes and unclaimed returns account for more than 8.9 million uncashed Canada Revenue Agency (CRA) cheques, totaling $1.4 billion.²¹ The value of household tax credits won’t solve a household’s financial challenges, but it’s a start.

Building upon CRA’s automatic tax filing pilot and approaches to streamline and simplify tax filing, there is an opportunity to explore support services that better position Canadians to navigate administrative processes to qualify and access credits. And to learn from community organizations including food banks who offer “wrap around services” such as food and financial literacy programming for Canada’s most vulnerable and marginalized populations.

Align food security objectives with Canada’s home building boom. Cutting housing costs can transform a household’s budget. The new federal Liberal government’s plan to build 500,000 homes a year would boost the economy and address a critical need: one of the priority functions of Canada’s forthcoming entity “Build Canada Homes” (BCH) is to build affordable housing at scale. This priority includes a $6 billion commitment for deeply affordable housing including supportive housing, Indigenous housing, and shelters. Complementary to building these homes rapidly and setting homelessness targets with provinces, government could also consider aligning with national food security targets and activities as a measure of their success in affordable housing and enabling people to achieve a healthy, more productive lifestyle that in turn contributes to growing Canada’s economy.

Food insecurity is a systemic problem, requiring systems-based solutions. As Canada embarks on its pro-growth era, it is opportune to consider how its unified approach can be applied to address the most chronic symptoms of a poor economy—food insecurity and poverty.

Experiences and approaches from around the world

Food insecurity affects every country, and over 295 million people worldwide face acute hunger.¹ Countries are taking different approaches to measure, monitor, and mitigate the issue, which extends far beyond food programming and policy into income, housing and social equity domains. However, advanced economies like Canada are increasingly expanding food programming to counter the short-term impacts food insecurity is having on communities.

United Kingdom

More than 7 million people, or 11% of the population, in the U.K. are living in food insecure households.²² And one-third of children in the U.K. are living in poverty. To tackle this challenge, the government launched a Child Poverty Taskforce.²³ The U.K. also has a few notable programs that directly relate to food access such as:

Free school meals program provides meals for children and young people during school with standards on the nutrition of food offered. Complementary to school meals, the UK launched Holiday Activities and Food (HAF) in 2022 to improve access to food and resources during school breaks.²⁴
Healthy Start vouchers in England, Wales, and Northern Ireland support people on low incomes to access pre-natal vitamins, infant milk formula, and healthy food for young children. In Scotland an equivalent Best Start Foods program launched in August 2019.
Household Support Fund: Allocated £1.5 billion in 2022/23 to help with household essentials, including food, energy and housing bills.

The U.K. is also undergoing its largest home building campaign since World War II. The lack of affordable housing and its impact on household stability and spending is a key driver for this building boom. The campaign goes as far as outlining a plan for creating a dozen new towns of approximately 10,000 homes each.²⁵

New Zealand

In New Zealand, 27% of households with children ran out of food often or sometimes in 2023, up from 14.4% in 2021.²⁶ In response to rising rates of food insecurity, New Zealand led the development of a 10-year food security roadmap for the Asia Pacific Economic Cooperation (APEC) covering four key areas: digitalization, productivity, inclusivity and sustainability. APEC includes 21 member countries across the Pacific Rim, including Canada.

Food security research, policy and programming are delivered under multiple ministries in New Zealand, including health, education, and social development ministries, signalling the recognition of food insecurity’s impact on human health and wellbeing. Within New Zealand there has been a growing movement to improve access across its four main regions to resources for basic needs and to improve healthy living standards:

Launch of the Public Health Advisory Committee in 2022, which was asked in 2023 to review New Zealand’s food system and provide advice and recommendations, which are presented in the 2024 report, Rebalancing Our Food System.
New Zealand provides some government funding to maintain community food distribution infrastructure and support regional community food hubs under its Food Secure Communities program, which was established in 2020.
Ka Ora, Ka Ako (Healthy School Lunches Program) was launched in 2019 to provide free lunches to students attending schools in low-income areas. The program is active in over 1,000 schools and provides meals for nearly 240,000 students every day.

United States

Food insecurity affected 47 million Americans in 2023. The U.S. has experienced a similar post-pandemic trend to Canada with the rate of food insecure households rising from 10% to 14% between 2021 and 2023.²⁷ Among those in the OECD, only Costa Rica has higher levels of income inequality. And proposed legislation such as, One Big Beautiful Bill Act, risk worsening inequality in the U.S. by raising national debt and potentially triggering cuts to programs that are designed to reduce food insecurity and improve food access, including:

The Supplemental Nutrition Assistance Program (SNAP) provides a restricted subsidy to purchase food. SNAP serves an average of 42.2 million people per month (12.6% of the US population).²⁸ Participating in SNAP for six months has been shown to decrease food insecurity by 5-10 percentage points and is even more effective for children and those with very low food security.^{29 30} SNAP has also shown to positively impact local communities’ economic activity and job creation.
The Special Supplemental Nutrition Program for Women, Infants and Children (WIC) provides a restricted food subsidy for pregnant and post-partum people, infants and children up to five years old who meet both income- and nutrition-based eligibility criteria.³¹ In 2023, the federal government spent US$6.6 billion on WIC program, reaching an average of 6.6 million people per month.³²

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RBC Thought Leadership

Lisa Ashton, Agriculture Policy Lead

Maple Leaf Centre for Food Security

Sarah Stern, Executive Director

Arrell Food Institute at the University of Guelph

Evan Fraser, Director and Professor

Pauline Cripps, Community Food Lead

Statistics Canada. Food insecurity by economic family type, 2025.
Food Banks Canada. HungerCount 2024, 2024.
Statistics Canada. Labour force characteristics by census metropolitan area, three-month moving average, seasonally adjusted, 2025.
Statistics Canada. Employment by industry, monthly, seasonally adjusted and unadjusted, and trend-cycle, last 5 months (x 1,000), 2025.
Statistics Canada. Household spending by household income quintile, Canada, regions and provinces, 2025.
French et al. Nutrition quality of food purchases varies by household income: the SHoPPER study, 2019.
Statistics Canada. Labour force characteristics by census metropolitan area, three-month moving average, seasonally adjusted, 2025.
Li T, Fafard St-Germain AA, Tarasuk V. Household food insecurity in Canada (2022), 2023.
Statistics Canada. Food insecurity by selected demographic characteristics, 2025.
Statistics Canada. Food insecurity by economic family type, 2025.
Statistics Canada, Canadian Community Health Survey (CCHS) 2005, 2007-2008, 2009-2010, Ontario administrative health databases. Adapted from: Tarasuk, Cheng, de Oliveira, Dachner, Gundersen & Kurdyak (2015)
Gallegos et al. Food Insecurity and Child Development: A State-of-the-Art Review, 2021.
Pepsico. PepsiCo Reports First-Quarter 2025 Results; Updates 2025 Financial Guidance, 2025.
The Budget Lab at Yale. State of U.S. Tariffs: April 15, 2025
Food Banks Canada. Joint Open Letter: Cut Food Insecurity in Canada in half by 2030, 2025.
Beardsley, McCain, and Saul. Let’s commit to cutting food insecurity in half, 2022.
Innovation, Science and Economic Development Canada. Rural Economic Development.
Canadian Institute for Health Information. A profile of physicians in Canada, 2025
Statistics Canada. Census in Brief, 2022.
Canada Revenue Agency. Statistical report on the participation of the hard-to-reach populations in the tax and benefit systems, 2024.
Canada Revenue Agency. Approximately $1.4 billion in uncashed cheques is sitting in the Canada Revenue Agency’s coffers, 2022.
UK Parliament. Who is experiencing food insecurity in the UK? 2024.
Government of the United Kingdom. Tackling Child Poverty: Developing Our Strategy, 2024.
Government of the United Kingdom. Guidance: Holiday activities and food programme 2024, 2025.
Government of the United Kingdom. Government unveils plans for next generation of new towns, 2025.
Ministry of Health. New Zealand Health Survey, 2025.
USDA Economic Research Service. Food Security in the U.S. – Key Statistics & Graphics, 2025.
USDA Economic Research Service. SNAP in Action, 2025.
USDA Economic Research Service. Measuring the Effect of SNAP Participation on Food Security, 2025.
Johnson-Green and Claflin. Gender and Racial Justice in SNAP, 2021.
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USDA Economic Research Service.

In this week’s edition: Trade signals at the G7, why it’s so hard for steel and aluminum manufacturers to diversify from the U.S., and how long it typically takes to get a major trade deal done.

The week that was

Reports surfaced (here and here) that Canada and the U.S. have a working trade document, including details of a potential deal. No timeline yet.
With Mexico’s Claudia Sheinbaum and India’s Narendra Modi in Kananaskis for the G7, could more trade talk with Canada be on the agenda?
According to the World Bank, we’re about to experience the slowest decade of growth since the ’60s–the result of uncertainty caused by tariffs.
While Trump celebrates a “done deal” with China after two days of negotiations, word from China is more muted—Beijing’s official news agency called it an “agreement in principle.” China is said to only be lifting restrictions on rare earth minerals exports for six months leaving open the possibility of future escalation.
In the next week or two, Trump plans to send letters outlining unilateral tariffs to many countries.
Tariffs have yet to generate the inflation jump in the U.S. that many expected. Just wait, say economists.
Dominican Republic has become a hot spot for U.S. companies seeking alternative manufacturing hubs. The country’s 92 free zones and proximity to the U.S. are two key factors.

Trade signals at the G7

While there may not be a major breakthrough with the U.S. on tariffs and trade at the G7, there are certainly a couple things to keep an eye on:

Critical Minerals: The U.S. trade war with China exposed major dependencies on critical and rare earth mineral supply chains, which Beijing dominates. To feed its lofty energy and tech ambitions, the Trump administration needs a reliable supply. Collectively, the G7 possesses massive untapped resource potential, and the capital needed to fund projects.

USMCA: Claudia Sheinbaum’s attendance will mark the first time since Trump’s inauguration that all three North American leaders are participating in the same multilateral meeting. This unlocks the potential for a sideline meeting to chart a course for the 2026 USMCA review and discuss ongoing efforts to combat the issue of fentanyl that remains the core justification for the U.S.’s IEEPA tariffs on Canada and Mexico.

Noteworthy

By Jordan Brennan

I was in Ottawa this week at Canada 2020, where the general sentiment among attendees was cautious optimism. The focus was on reigniting growth through nation-building projects. And while opportunities abound—in energy, mining, housing, infrastructure, AI—a rebooted operating model is needed. A few themes stood out:

Internationally, Canada is seen as a high-risk jurisdiction thanks to regulatory delays (i.e. impact assessments that can stretch over a decade) and political instability (think rising separatist sentiment in Alberta). It was noted that international investors routinely add a 20% risk premium to capital allocation decisions involving Canada. Then there’s the broad political discretion cabinet holds over major projects. To unlock capital at home and abroad, we’ll need more regulatory and political certainty. Could a national trade corridor strategy help reduce Canada’s perceived risk profile?
Building export infrastructure assumes we’ll develop the resources to fill it—but many projects remain stalled or cancelled. So how do we responsibly move resources from Canadian soil to global markets? Here, treaty rights and the duty to consult First Nations come into focus—not as a hurdle, but as a competitive advantage. Successful companies build full economic partnerships with First Nations early in the process—on everything from impact assessments, employment and procurement agreements and equity stakes. If we want more projects approved—and faster—this kind of partnership is essential.
Same goes with Arctic security. With the retreat of sea ice, the Northwest Passage is being contested by foreign powers in part because it dramatically shortens the shipping time between North America, Europe and Asia. As one panelist put it, there’s no better way to assert Canadian sovereignty in the north than by developing the region. That means infrastructure—digital and physical—as well as the jobs and skills tied to mineral development.
Another challenge is timing. While resource prices are set on volatile global spot markets, projects like LNG terminals or major mineral developments have multi-decade lifecycles. Development must be aligned with future demand patterns, yes, but we must also be hyper-focused on cost competitiveness. Forecasting global energy and mineral needs in 2050 is daunting, but essential if we’re to attract the patient capital needed for big projects.

Three questions…

With the U.S. doubling tariff rates on steel and aluminum, Jake Silverthorn on RBC’s Capital Markets Diversified Industrials team, helps us understand the current landscape.

Q: Why are Canadian steel and aluminum producers more impacted from U.S. tariffs than vice versa?
A: There is a structural difference between U.S. and Canadian markets. Canadian producers mostly operate in spot markets while U.S. producers use contract-based transactions, which makes it difficult for Canadian companies to effectively pass through tariff costs. Additionally, the tariffs have created a demand and pricing imbalance between the U.S. and Canadian markets.

Q: Why is it hard for Canadian producers to diversify away from the U.S. market?
A: Given high shipping costs, the U.S. represented the most profitable destination. Canadian producers have strategically placed their operations near U.S. ports to make shipping easier.

Q: What can Canadian producers do to maintain their U.S. market share?
A: To remain competitive with the domestic U.S. producers and maintain existing operations, Canadian producers are expected to absorb part of the tariff costs, impacting margins and cash flow.

Bottom line

917

The number of days a typical trade deal takes to complete from start to finish (The USMCA took 896 days). In April, Trump promised 90 deals in 90 days. With just a couple weeks remaining on that self-imposed deadline, the U.S. has signed 1 deal (U.K.) and has scored a tariff truce with China.

Key Findings

Gas is critical in our best—and worst—case scenarios for global energy systems. Gas will be vital as a transition fuel in a ‘Decarbonizing World’ before declining by the late-2030s; and as an energy security cushion in our worst-case scenario, that we call ‘Dystopian World’.
Gas can anchor G7+’s energy security—but needs work. For G7+ consumers, it can reduce dependence on Russia in the near-term and avoid boom-bust cycles. In the longer term, it opens up promising new markets for G7+ producers. But the commodity is geopolitically problematic, too expensive in certain regions like Asia, and deemed too carbon-intensive. The G7+ can help overcome those hurdles.
Gas can help address, but also worsen, climate change. Achieving net-zero before the 2060s is challenged. But the G7+ can advance policies and technologies that catalyze carbon capture, accelerate methane intensity reductions, and encourage the development of low-carbon alternatives such as ammonia and hydrogen. That would help limit global temperature rise to around 1.7-1.8 Celsius compared to pre-industrial levels.
The G7+ could emerge as the most influential LNG player. By 2040, LNG exports from the U.S., Canada and Australia can power G7+ economies and also ship gas to emerging Asia, as we outline in our ‘Democratic World’ scenario. It’s an opportunity for G7+ to expand its geopolitical influence and forge stronger ties with emerging markets.
Global LNG export capacity may need to rise by nearly 50% by 2040. Current export capacity and supply under construction is insufficient to meet the needs and aspirations of a rising global population and a world economy that will expand 42%, according to our ‘Divided World’ scenario.
G7+ compact can help unlock financing for LNG projects. It could facilitate funding from a range of financial institutions, including multilateral development banks and national export credit agencies, that have excluded natural gas investment for fear of “locking in” emissions.
Exporting gas would require US$1.2-trillion in investments in North America alone. A build-out of the continent’s gas infrastructure would likely require around US$1.2 trillion over the next 15 years. But it would require supportive policies and clear frameworks for communities and corporations.

The Long Game for LNG

Welcome to the 2040s.

In the decade that will take us to the mid-century, our world will be very different, and so will our energy needs.

The planet will be home to at least a billion more people, with a population well over nine billion. The world’s economic output, if it follows recent decades, will add the equivalent of another U.S. economy, spread largely across Asia and the global south, with all the energy demands that go with it. Add to that something entirely new—the world of artificial intelligence at mass scale, with computing needs that, for now, seem incomputable. By one estimate, we will need 4,000 more terawatt hours of power to run this emerging data centre economy; that’s equivalent to 15% of the world’s electricity generation today.¹

Another step change in energy demand may require more of every practical and affordable energy source, but the greatest expectations may be placed on natural gas. It’s expected to become the world’s dominant energy form, surpassing oil, having already grown in supply by 70% in the first quarter of the 21st century.² The advent of liquefied natural gas, and supertankers to carry super-chilled LNG across oceans, has transformed the gas outlook even more. In a little over a decade, the United States has transformed itself from amongst the world’s largest gas importers, to the world’s largest LNG exporter.

As oil was to the 20th century, gas may be as critical to the 21st, but not without strategic choices that are already challenging the world. Russa’s invasion of Ukraine, and its weaponization of gas to weaken Europe, is just one indication of how the world’s rapidly growing reliance on gas has put energy security at risk. Rapidly growing and urbanizing countries across much of the world have found their dependence on imported gas to present further risks. The West’s growing ambition to reshore manufacturing, and remilitarize, may require more gas, too, as a reliable and affordable concentrated energy source.

Few bodies may be better suited to address these challenges than the G7, the group of leading liberal democracies (the United States, Canada, the U.K., France, Germany, Italy and Japan) that is meeting June 15-17 in Kananaskis, Alberta. Atop the group’s agenda: energy security.

The G7 was formed 50 years ago, in the mid-1970s, in response to similar disruptions to the global economy caused by an oil shock and ensuing conflicts. Today, the alliance faces new challenges, particularly from China and Russia, and may find opportunities in reasserting itself through an approach to democratic and decarbonized natural gas for a fast-changing world.

Properly managed, the G7 and key allies such as Australia and South Korea, known as G7+, can create stronger alliances with emerging markets, especially in Asia, stabilize energy prices and strengthen long-term global growth. It could even provide a bridge to lower energy emissions, by displacing coal. Led by the European Union’s 107 million tonnes per annum (mtpa) and Japan’s 64 million mtpa of LNG consumption, the G7+ consumes 227 mtpa, or 51% of global demand. That exceeds the 179 mtpa currently produced by the U.S. and Australia.

By 2040, however, the G7+ gas trade balance could reverse such that its supply far exceeds the demand of its members and allies—by almost 150 mtpa—requiring the Western-led alliance to secure new markets. China is expected to be, by far, the largest purchaser of LNG in 2040 (163 mtpa, from 79 mtpa in 2024, according to Rystad Energy’s base case). But trade frictions with North America could result in Chinese LNG imports diversifying away from American sources.

For the G7, other allies will be critical to ensure a greater balance between supply and demand. India is often seen as a vital long-term prospect for G7+ exports, with projected demand of 63 mtpa. But other emerging Asian markets such as Pakistan, Bangladesh, Thailand and Indonesia will be essential, too, as they’re projected to consume a combined 219 mtpa by 2040. In a potential world where the Chinese market is inaccessible to the U.S., and India follows its own path—prioritizing price above all else, perhaps from Russian supplies—Asian demand will be vital to any G7+ strategy.

With all these forces at play, the world almost certainly will need more gas in 2040—but just how much will be needed?

To map out potential pathways, RBC Thought Leadership and Oslo-based Rystad Energy developed a novel research methodology to outline plausible scenarios for the 2040s, knowing the trajectory of growth will be critical to the mid-century condition of our world. Each was shaped by geopolitical alignments, climate policy ambitions and market dynamics. We then worked with a range of policy experts to assess the risks in each scenario, and develop broader policy options.

The outcomes suggested by each scenario are profoundly different. The range of our pathways shows that total global gas exports could grow from 411 mtpa in 2024 to as high as 737 mtpa by 2050—or shrink to just 366 mtpa. The net swing of 371 mtpa is nearly equivalent to current LNG exports.

The difference depends on whether the world develops more structured markets for gas, finds ways to connect fast-growing markets with reliable (and democratic) suppliers, and invests in technologies to cut emissions. The environmental attributes of this future gas supply—including the scale of transition to capture carbon and low-carbon derivative fuels like hydrogen and ammonia—will have a major impact on the direction of climate change, as methane emissions from gas are widely considered to be more dangerous to global warming than carbon, even though they’re also easier to contain.

A Role for the G7+

The G7+ nations have an interest in securing long-term supplies of reliable and affordable natural gas, having experienced price shocks from the Western U.S. power crisis of 2000-01, the post-Fukushima disaster LNG price spike in Japan, the recent twin shocks of the Covid pandemic and Russia’s weaponization of gas exports in its war on Ukraine. A coordinated G7+ approach can stabilize markets through more cohesive policy alignment and joint investments around infrastructure.

Leveraging democratic, rules-based gas markets can ensure environmental standards across the supply chain, and further add to economic growth through industrial decarbonization, including investments in carbon capture, utilization and storage (CCUS), low-carbon fuels for industrial heat and heavy transportation, and a coordinated action plan on zero flaring and mitigation of fugitive methane emissions.

In a potential world where the Chinese market is inaccessible to the U.S., and India follows its own path—prioritizing price above all else, perhaps from Russian supplies—Asian demand will be vital to any G7+ strategy.

As such, emerging Asian markets including Pakistan, Bangladesh, Thailand and Indonesia, will be essential for the G7+ as they’re projected to consume a combined 219 mtpa by 2040, especially as they accelerate the switch from coal to natural gas.

To do all this, a G7 gas compact may be needed to lay the foundation for a robust and secure natural gas infrastructure that aligns with the needs of producers and consumers, delivering price stability, affordability, reliability, and lower greenhouse gas emissions. Such a compact could address the needs of a rapidly growing global gas world to develop more sophisticated markets and financial tools; to resolve infrastructure bottlenecks and coordinate national investment plans; and work collectively to ensure rapidly growing countries across Asia, Africa and Latin America have access to G7+ supplies, not only for economic growth but for geopolitical stability.

But the G7 and its core allies need to recognize the risks of some very divergent paths if a coordinated approach is not taken. Our modelling lays out four such outcomes.

Behind the scenes—our research approach

The research and methodology behind this paper is unique for three main reasons:

The research paired quantitative modelling with qualitative interviews and roundtable forums, including with senior officials in Canada’s federal and provincial governments, the private sector, Indigenous groups, international research institutions and multilateral development banks. The team engaged these experts individually and as part of convenings in Washington D.C., Vancouver, Ottawa, London, Beijing, New York, Calgary and Toronto.

RBC Thought Leadership spoke to more than 100 experts in Canada, the U.S., Japan and Europe to explore practical energy security solutions. These included representatives from the Asian Development Bank (ADB), the Bloomberg New Energy Finance (BNEF), Mokwateh, the First Nations Climate Initiative, Dr. Robert J. Johnston, Senior Director of Research, at the Center on Global Energy Policy, Columbia University, and Dr. Ken Koyama, Senior Managing Director, Chief Economist at the Institute of Energy Economics, Japan (IEEJ). RBC Thought Leadership partnered with Rystad Energy to collaborate on the data and modelling for this research.

The four scenarios were modelled for the purposes of developing robust recommendations for the G7+ heading into the Kananaskis meeting in June. We know that traditional forecasting methodologies fall short of capturing the complex drivers of change in our geopolitical landscape and energy systems. We mapped these drivers of change and developed a range of four distinct yet plausible futures against which to stress-test what a coordinated G7+ natural gas strategy could look like.

The World of 2040: Four Very Different Scenarios

The scenarios are built on different variations of key drivers in the G7+ environment, including geopolitical stability, population and economic growth in emerging markets, digitization and data centre deployment, climate and energy policies, the role of international institutions and multilateral forums, fossil fuel production, manufacturing and supply chain distribution, the role of civil society, social cohesion and global gas demand.

Among our assumptions that span all four scenarios:

The world’s population will be approximately 9.2 billion, with significant regional variation depending on GDP, education and healthcare trends;
coal consumption will continue to decline in OECD countries;
continued growth of coal in Asia will offer significant potential for coal-to-gas switching;
oil will remain a dominant fuel for the transportation sector, particularly in emerging Asia;
nuclear generation will continue to have a strategic but overall minor role to play into the 2030s, with new builds expected in Asian markets such as China and in the U.S., particularly to meet growing demand from data centres;
renewables will enjoy exponential growth, particularly in solar and wind, as costs continue to decline;
global temperatures are expected to be anywhere from 1.8-2.2 degrees Celsius above pre-industrial levels.

The following scenarios are by no means a prediction of what the future will look like in 2040, rather, they represent a range of plausible futures.

Four Scenarios

A Divided Gas World

Headline of the year: “Japan and China resilient to global gas price shocks”
Fragmented, protectionist world order, with a further erosion of international institutions and growing influence of Russia and China as global powers.
Australia, Russia, Qatar and the U.S. dominate global gas production; concentrated gas supply subjects the G7+ to significant market risks and volatility as a supply gap emerges.
Technology growth is regionalized with China and the Gulf nations leading in AI and digital infrastructure that matches North America, driving gas flows to non-G7 markets.

Context

Divided 2040 is characterized by protectionism and regionalism, as the superpowers continue to recede from global alliances, opening the door to a world dominated by Russia for energy and resources, and China for technology and manufacturing. Concerns about energy security in the mid-2020s and early 2030s are now exacerbated by supply and affordability challenges. Multilateral institutions and alliances such as the G7 have limited influence over state actors. The U.S., China and other major global players have receded from international institutions and alliances, further embedding realpolitik and an increasing focus on national policy and borders. Energy security is one of the world’s primary concerns and has had a deep impact on emerging markets’ ability to industrialize and develop economically. A current boom-bust cycle leaves consumers exposed to volatile prices, while major producers such as the U.S., Qatar, Russia and Australia are vulnerable as customers avoid signing long-term contracts. As countries focus on addressing immediate energy security challenges, climate activism has given way to more extreme and violent civic action.

The Global Energy Story

Total power demand is up 66% in 2040 compared to 2025, driven by the industrialization of emerging markets, electrification of transportation, heating and industrial processes. Countries prioritize the deployment of energy systems based on renewables and clean energy sources such as nuclear and hydro, and while natural gas remains an important transition fuel, reliance on fossil fuels declines globally.

Global climate action from the late 2010s and early 2020s has slowed considerably, with only a handful of European countries strongly dedicated to the cause. While this world remains divided, climate progressivism still endures. Global companies and capital remain directionally committed to a net-zero target. Emissions, on a gradual decline for the remainder of the century, are due to hit net-zero by 2096 as temperatures are limited to 2.0C, an outcome marginally out of bounds of the Paris Agreement.

South Korea and China continue to lead as technology innovators and providers, while other nations are falling behind in the AI revolution and remain mere buyers of those technologies. Global data centre energy demand is about six times what it was in 2025. Technological development is increasingly influenced by regional powers, leading to divergent standards and ecosystems. This fragmentation hampers global interoperability and exacerbates geopolitical tensions. Efforts by Gulf nations to fast-track AI infrastructure deployment as set out in the mid-2020s have come to fruition. The UAE continues to have the highest public cloud spend per employee in the region and is now firmly established as a global AI leader, with Saudi Arabia and Singapore also in the forefront. Given China’s diversification of gas supply and acceleration of domestic production efforts in the mid-2030s, the Gulf and China are strong rivals to the G7 nations when it comes to clean technology innovation and digital infrastructure.

The LNG Story

The world needs to find 207 million more tonnes of LNG by 2040, relative to current capacity and supply under construction. Industrialization of emerging markets like Indonesia and India has been constrained due to the lack of affordable energy supplies. The rise of technological infrastructure in South Korea, China and the Gulf, however, provides a strong demand signal for consistent, growing natural gas demand that peaks in 2038. A supply gap emerges, and gas consumers are subject to market volatility with pricing predominantly influenced by incumbent suppliers—the U.S., Russia, Qatar and Australia—that hold a concentration of supply. The U.S. remains the world leader, bringing on more LNG than Russia and Australia through the 2030s. Other members of the G7+ are subject to market volatility as prices fluctuate, controlled by leading producers and subject to regional market disruptions.

Technology leaders such as South Korea, India and China remain dependent on non-democratic sources such as Russia for the majority of their energy supply to power data centres and digital infrastructure. The global landscape of AI data centres and digital infrastructure, ownership and operation are led by technology leaders. And while developing nations still gain access to AI tool sets, they have little say in setting standards and experience increasing bias and unfair terms from technology providers.

A Dystopian Gas World

Headline of the year: “Indonesia’s new robot factory stalled by global gas shortage”
Rise of regional conflicts and a global economic downturn in the late 2030s has led to a highly fragmented world.
Fossil fuel dependence continues to rise alongside rising demand for LNG.
With a significant energy supply gap emerging, Gulf states experience major growth.
Energy security dominates policy agendas, distracting from climate action, while national agendas prioritize trade weaponization and geopolitical leverage in the interest of security.

Context

In Dystopian 2040, regional conflicts and a protracted global economic downturn experienced in the late 2030s have led to an erosion of international institutions and the post-WWII global order. International protocols around the rule of law and global security are unenforceable and stuck in a quagmire of indecision and veto power. A failure of any country or international institution to meaningfully act in the face of growing aggression out of occupied Ukraine and the Middle East has resulted in violent and authoritarian regimes redefining the world stage. In economies like the U.S., fearmongering, protectionism and hardline authoritarian rhetoric has led to a declining global presence. The EU is dominated by protectionist policies, focusing on local economies and a handful of key trading relationships to buffer the impacts of regional conflicts. Security dominates national policies and agendas, with nationalist policies creating a bifurcated trade and investment climate. China’s imposition of export restrictions on rare earth elements in the mid-2020s set the stage for a growing trend of supply chain control, particularly in technology and defence sectors. As a result of closed borders and bloc-style co-operation, international trade is limited to small clubs of countries, who limit market access, building on the techno-nationalist policies of the late 2020s to bolster independence from foreign supply chains and competitiveness on semiconductor production. Rising unemployment due to a global economic downturn and a growing technological divide means that there is a rift among those who have access to digital infrastructure and those who do not. In a world where civil society and institutions are characterized by high levels of mistrust and a lack of coordination, the G7 struggles to build energy resiliency and withstand periodic energy supply and demand shocks.

The Global Energy Story

Climate change, alongside regional and protracted conflicts, creates fresh waves of humanitarian crises. The phrase “energy transition” has almost been forgotten, while national security agendas dominate the narrative around energy systems. Global sentiment is heavily tied to energy security, driving demand for low-cost fossil fuels such as oil and coal, at the expense of managing emissions. Fossil-fuel rich Gulf nations experience significant growth as they support Asian economies, and unlock a wealth of state capital increasingly oriented towards a data economy. Globally, increased nationalism and national security concerns lead to a decline in multilateralism. Coalitions like the Paris Agreement fade in significance as the pursuit of cheap energy and economic recovery dominate priorities. The weaponization of trade becomes a common occurrence—even an expected phenomenon as the competition between nations spreads into new spheres. Expect increased militarism and protectionism.

The LNG Story

Natural gas demand is up 16% from 2025 levels. These numbers are tempered by demand for other cost-effective fossil fuels like coal, which remains a core part of energy systems (22% of total primary energy). Global fossil fuel demand continues to rise beyond the original 2030 projections with no sign of slowing into the 2040s. As climate goals take a back seat to national security, coal-to-gas switching in Asia does not play out as predicted in the late 2020s. Energy and national security challenges lie ahead, with projected supply shortages limiting global economic growth. By 2040, an incremental 225 million tonnes of LNG—equal to over half what the world produced in 2024—is required on top of current and in-construction supply.

A Decarbonized Gas World

Headline of the year: “G7 Methane Club Declares Victory at 15th Anniversary of Kananaskis”
Climate security dominates global policymaking, with aggressive emissions reduction targets.
Global power demand more than doubles, driven by industrialization and digital infrastructure. Renewables and clean-tech solutions take the lead to meet demand.
LNG demand declines, presenting the risk of stranded assets.
Remaining gas supplies are governed by the emergence of a clean gas market, with methane performance tracking to meet demand for abated natural gas.

Context

In Decarbonized 2040, aggressive climate policies and targets dominate the international landscape, as the world’s leading economies race to cut emissions and secure a more cost-competitive energy supply. Climate security is the pre-eminent focus shaping energy policies as destructive climate events became increasingly difficult to ignore by the 2030s, shaping voter preferences and civic action, and leading governments to re-invigorate global cooperation and international institutions. There is a meaningful return to global climate targets and the creation of new market mechanisms to unlock value from decarbonization. This includes the emergence of a clean fuels and certified natural gas market, underpinned by the measurement and tracking of methane emissions. Carbon capture is on track to reach three billion tonnes sequestered by 2050, equivalent to four times Canada’s total emissions in 2025. Millennials and GenZ, now in critical leadership roles in organizations, are driving the decarbonization agenda across governments and institutions. Civil society, too, is characterized by strong, diverse voices who are active in holding institutions accountable to their climate commitments.

The Global Energy Story

While China has maintained its position as a clean technology manufacturer and intellectual property leader, the West’s investments in clean technologies through the 2030s begins to pay off, with a more distributed global supply chain that leads to greater resiliency and lower costs.

Countries that developed small modular reactors (SMRs) in the 2030s—Canada, the U.S., Argentina, Poland, Romania and China—are exporting that expertise around the world to countries seeking clean and reliable energy. Electrification is a clear winner, too, allowing for the displacement of direct-use emissions and an increase in energy efficiency. Oil demand falls almost 60% from current levels to 43 million barrels per day by 2050—a level not seen since 1969. Natural gas demand, while falling, remains more resilient, down 33% from current levels.

The LNG Story

The maturity of carbon markets, border adjustment mechanisms and a “methane club” across G7+ buyers and sellers drives a robust certified natural gas market. Throughout the 2030s, governments and industry leaders worked to develop clear and transparent market regulations, as companies were incentivized to reduce methane emissions and sought to differentiate themselves based on performance. National regulations in G7+ countries are grounded in a multilateral G7+ natural gas strategy, which enables global trade and methane measurement. Significant innovation around satellite technologies has enabled more effective methane tracking and robust data sets, enabling greater consistency of methane tracking than the world saw in the 2020s. There is a risk that existing LNG infrastructure becomes stranded, as the world’s leading economies shift to alternative energy sources and LNG demand declines. Global LNG demand declines rapidly by 2040 such that the world does not require any net new LNG by 2050 relative to existing and in-construction supply. Existing natural gas supplies from G7+ sources have a competitive advantage among climate-minded buyers looking for hydrogen/ammonia and abated gas. Multilateral development banks like the Asian Development Bank have supported energy efficiency improvements in gas distribution and gas power plants as well as coal-to-gas switching projects in Asia.

Net-zero likely occurs in the mid 2070s, with a projected temperature rise of 1.8C. However, further efforts such as requiring a 30% decrease in carbon intensity of natural gas production post-2030 could result in a further 40-45 billion tonnes of incremental CO2e avoided in this scenario by 2100.

LNG: An opportunity for reconciliation

Canada’s LNG opportunity cannot be capitalized without Indigenous partnerships and participation. Most of the land connecting the country’s major gas fields to the Pacific Coast are unceded territory, claimed by, or ratified through, treaty to First Nations in British Columbia. This is a huge opportunity for reconciliation—one that’s already being slowly realized. Cedar LNG and Ksi Lisims, two West Coast projects that will add 15 mtpa to Canada’s export capacity, have significant Indigenous ownership through the Haisla and Nisga’a Nations, respectively. By cultivating meaningful Indigenous partnerships and developing models for Indigenous capital, capacity and consent, LNG can be an opportunity for shared prosperity, while allowing Canada to meet the moment and expedite major projects quickly.—Varun Srivatsan

A Democratic Gas World

Headline of the year: “G7+ agreement to connect Earth with low-orbit data centres”
The world is dominated by coalitions of like-minded nations, and multilateral institutions are reinvigorated.
A dual-energy trajectory emerges as renewables scale rapidly with global climate funds while LNG demand continues, driven by Asian industrialization and coal-to-gas switching.
Global supply chains and trade are more evenly distributed and resilient, with the G7+ coalition solidifying its influence in LNG and manufacturing in an effort to counter China’s dominance over supply chains.

Context

In Democracy 2040, the world features strong coalitions among like-minded nations, with a growing effort to counter the fragmentation seen in the late 2020s and early 2030s. Multilateral institutions are experiencing a renaissance, undergoing a shift in their governance and structures to address frequent and critical global challenges. There are a few dissenting and regionally-focussed nations, as we saw during a decade-long retrenchment of international institutions that continued through the late 2020s and early 2030s. The international landscape is now dominated by coalitions of democratic countries in the G7+ to counter China and Russia, and ensure resilience in critical sectors of the economy such as advanced manufacturing, defence and energy. The most recent G7+ Agreement enables G7 gas importers and allies such as South Korea to secure gas supply for power data centres and digital infrastructure needed to power the next generation of AI technologies. As renewables continue to scale, gas has a critical role to play to serve demand peaks in big cities and support resiliency of electricity grids. The G7+ cooperation on natural gas has reduced gas market volatility, compared to the 2020s. Without a robust clean gas market, however, tensions remain between EU countries and the rest of the G7 members, who have compromised on meeting emissions targets in favour of affordability and resiliency. The global public square is robust in democratic countries, with civil society organizations advocating for greater collaboration and cooperation between countries with shared values and renewed commitments to bold climate goals. However, system-level oppression of civil society actors and voices in non-democratic states creates a global divide between liberal democracies and the rest of the world.

The Global Energy Story

Progress on climate is slow to start in the 2030s, but the Green Climate Fund is beginning to have real impact on climate mitigation and climate action. Contributions from both the global south and the G7+ mean that in 2040, the Fund has reached $800 billion worth of leveraged investments with a total of 25 billion tonnes of avoided emissions. The Green Climate Fund is only one example of a general sentiment that shifting away from fossil fuels is inevitable and renewables’ share of the global energy mix continues to increase exponentially. The rapid adoption of cost-competitive renewable energy sources and the G7+’s coordinated strategy on natural gas helped the West secure energy supplies for rapidly growing economies like Indonesia and India.

Global trade and supply chains are diversifying in 2040 through international and regional trade agreement. Mutually beneficial friendshoring and reshoring in a systematic, orderly fashion provides policy certainty and unlocks capital for critical infrastructure. For the G7+, diplomacy among its members helps develop common ground for climate-minded economic growth, which in turn secures its geopolitical presence in South and Southeast Asia, countering growing Chinese influence.

Technology leadership is spread across a range of competitive states, including continued leadership from China, the U.S. and the United Arab Emirates, as in the mid-2020s. But a renewed commitment to multilateral institutions has resulted in robust global pacts such as a Global Digital Compact that seeks to democratize access to AI and the energy sources needed to power a new data economy.

The LNG Story

Access to resilient natural gas supply through the G7+ coalition unlocks greater adoption of AI and energy needs for greater industrialization across Asia. Japan, Thailand, Korea, and India are major demand centres as an Asian renaissance dominates global LNG demand through 2050. LNG demand reaches 692 million tonnes by 2050—and is still rising as global economic growth drives demand. The climate impact of this reality is mitigated by the maturity of methane capture technologies and demand for abated gas by ethical buyers like Japan. However, a global clean gas market hasn’t emerged in the way experts predicted in the late 2020s. Clean gas market mechanisms are adopted by smaller coalitions of states and in bilateral or multilateral trading relationships. Growing carbon markets among the G7+ ultimately enables both energy transition and greater gas supply, which allows for growing natural gas demand rooted in significant coal-to-gas switching in Asia. While the G7+ coordination on a natural gas strategy enables access to resilient supply and demand within these countries, China continues to play a significant and growing leadership role in clean technologies and manufacturing, posing a major risk to the G7+ who actively seek these technologies to meet their climate commitments.

The Kananaskis Agenda: An Action Plan for Natural Gas

As the G7 host and the world’s fifth-largest natural gas producer, Canada is uniquely positioned to shape the future of natural gas by advancing its own economic and climate goals and supporting global energy security.

But there are several roadblocks that’s holding back natural gas. First, G7+ member nations — the core group plus allies like Australia and South Korea — are not aligned on gas’s role in the future of energy markets. Major producers like Canada and the U.S. need contract security to build up infrastructure and strategic supply. But consumers such as France, Japan and Britain want contract flexibility and diversified supply sources to hedge their risks and meet climate targets. Another layer of complexity comes with Canada, Germany, Italy, Japan and the U.S. favouring natural gas, while France and Britain support greater use of hydrogen, nuclear and abated gas to achieve climate goals. Moreover, climate-minded governments in Australia, Canada, France and the EU also don’t see eye-to-eye with the U.S., which sees fossil fuels driving its energy dominance.

A coordinated and cooperative policy framework adopted by G7 members can facilitate the creation of a more resilient natural gas and LNG market that reduces price volatility, unlocks capital, increases diversified supply and de-risks demand, and enables the eventual transition to a decarbonized gas market.

Here are some action-oriented approaches that could help the G7, through its energy ministers, move toward a democratic and decarbonized future for gas:

1. Declare a G7 compact to support decarbonized natural gas

A G7 policy compact that defines the role of natural gas and related fuels across a range of energy demand scenarios can help break the boom-and-bust cycle of prices and investment. It can also signal investment and financing of gas infrastructure sufficient to meet the expected supply gap identified in three of the four scenarios outlined in this paper.

G7 governments should also work to end the debate over whether natural gas is a solution or contributor to climate change. It’s both. In the short to medium term, coal-to-gas fuel switching, methane intensity reduction, and deployment of gas as an intermittency solution for renewables make a significant contribution to climate action. Over the longer term, governments need to work with industry to secure a commitment to new pathways to develop abated natural gas pathways, which may be required across all scenarios.

2. Develop a stable, well-functioning global gas market

The LNG market has evolved dramatically over the past decade, from a series of regional markets anchored mostly by long-term, oil-indexed contracts to something more dynamic and global.

In these ways, the LNG market is starting to resemble the global oil market which has become deep, resilient and highly liquid since the 1980s, offering a wide range of contracts, price benchmarks, and risk management tools for both physical and financial markets. These features mean that oil prices, while volatile, have a greater capacity to absorb shocks and rebalance.

Despite progress, the LNG market still has a ways to go to become sufficiently global and liquid to attract price-sensitive importers and risk-averse capital providers. Price spikes in 2022, in the midst of the Russia-Ukraine conflict, were dramatic and damaging for consumers, leading to a rebound in coal demand in Asia and shut-ins of gas-intensive industrial production in the EU.

A key feature of a G7 gas compact should be to further develop a tradeable market with both financial and physical participants, which in turn derisks capital, reduces capital costs and incentivizes further investment. More financial, or non-commercial participants, can help expand liquidity and bring in new pools of capital.

The global LNG market also needs effective and transparent reference prices. The emergence of such benchmarks with variance in duration and indexation can anchor a well-functioning market. This includes the ability to structure contracts to trade LNG cargoes using a range of markers across varying periods of time to avoid exposure to a single formula based on Henry Hub or Brent benchmarks. G7 countries should look to build on existing efforts such as the Japanese-led Producer-Consumer Dialogue.

Methane-tech: Reining in a potent gas

Natural gas is predominantly made up of methane, a powerful greenhouse gas. Lowering methane emissions in the LNG value chain—from wellheads to carriers to regasification terminals—is seen as a key driver of environmental performance for companies. This is especially critical as methane is 28 to 36 times more potent than CO2 over a 100-year timespan.

Several technologies can help plug leaks from LNG infrastructure: this includes tech that can detect (through satellites, airborne and on-ground sensors), contain (through vapour recovery units, low-bleed pneumatic devices), or combust (high-efficiency flare stacks) methane. Emissions can also be reduced by replacing gas-powered devices such as compressors with electricity driven equivalents, freeing up the gas for shipment.

Several technologies and policies are already making a difference. In the U.S., methane emission intensities dropped across natural gas processing (30%) and transmission and compression (33%) facilities between 2014-23, according to Environmental Protection Agency (EPA) data. Norway, meanwhile, has the world’s lowest emissions intensity driven by policies such as a ban on non-emergency flaring as far back as 1971, and a venting and flaring emission tax imposed in 2015.

However, precise measurement of methane emissions remains a challenge, with estimates subject to widespread uncertainty and underreporting. As methane measurement advances (for example, through satellite-based monitoring, of which more than a dozen satellites are in orbit today), operators and regulators can further constrain emissions, lower measurement uncertainty, and take appropriate mitigating action.

Some methane mitigation technologies can also allow oil and gas producers to capture methane and feed it back into the gas chain to lower emissions. In North America, for example, leak detection and repair (LDAR) technologies and improved equipment maintenance practices can conservatively avoid up to 55 million metric tons of carbon dioxide equivalent (MTCO2e) in methane emissions annually—the equivalent of taking 13 million gas-powered cars off the road.-Vivan Sorab

3. Invest in decarbonization to cut emissions with new technologies

A G7+ gas compact should not be an endorsement of business-as-usual practices. Action on methane mitigation is critical alongside pathways to carbon-neutral fuels derived from natural gas.

The elimination of fugitive emissions and routine flaring/venting from the natural gas value chain is embedded in the Global Methane Pledge, which is central to the natural gas industry’s hopes to be aligned with a low-carbon future. It can be business-friendly, too, as mitigation costs are generally low and even net-positive in cases where fugitive gas can be captured, processed, and sold.

The G7 can play a critical role in supporting the deployment of measurement, monitoring, reporting, and verification (MMRV) protocols for methane emissions. The EU is leading such efforts through the rollout of its Methane Regulation, which requires the energy sector to document the methane intensity of fossil fuel imports, as a precursor to implementing a shift to lower methane-intensity fuels. This can be a differentiator for LNG sources, and involve major consumers such as Japan and South Korea to adopt regulations similar to the EU, while producers like Canada, the U.S., and Australia align on timelines and technology/policy pathways for rapid reductions in methane intensity.

The pathway to carbon neutral fuels should include the application of carbon capture and storage (CCS) technology to the production of ammonia, methanol, and hydrogen products. CCS technology will also be integral to preserving long-term demand security for natural gas in power generation as industrial production decarbonizes.

Energy security generally depends on the diversification of energy sources by fuel, technology, and geography. Clean electricity is essential to achieving a low-carbon economy, but maintaining a diverse, resilient system will require other sources including nuclear, bioenergy, offsets, and carbon capture. Low and zero carbon fuels can also support the decarbonization of industrial production processes such as steel and cement production that require higher temperatures. Canada and the U.S. can also partner with G7+ countries to decarbonize bunker fuel markets by switching to ammonia or methanol. Recent data from China shows a pathway to displace diesel in trucking with LNG, a pathway that could further evolve to clean hydrogen.

4. Promote new financing tools for developing economies to invest in clean growth

LNG’s status as a fossil fuel and its inherent price volatility as a commodity, along with its capital-intensive nature, presents project financing challenges. Developing countries tend to require large-scale infrastructure to import and store LNG and convert it from liquid to gas, to be shipped to internal markets. Most require concessional financing. A clear G7+ policy signal, providing greater acceptance of natural gas can unlock financing across a range of institutions, including multilateral development banks like the International Finance Corporation (IFC) and European Bank for Reconstruction and Development (EBRD), national export credit agencies such as Export Development Canada and private sector banks and asset managers that have excluded natural gas investment for fear of “locking in” emissions or being misaligned with Paris Agreement objectives. Supportive policies should stress the above-mentioned compact among G7 member states and commit to derisking and decarbonization the natural gas sector.

The continued evolution and progression of Article 6 of the Paris Agreement and the use of Internationally Transferred Mitigation Outcomes (ITMOs) such as Japan’s Joint Crediting Mechanism (JCM) also provide avenues for new financing methods based around the transfer of carbon credits generated from investments in methane reduction, coal-to-gas switching, or bunker fuel to clean ammonia.

However, the current Article 6/ITMO framework is not fit for purpose for natural gas or for trade between developed countries. Nonetheless, the spirit of “carbon clubs”—and creating shared incentives for natural gas-linked carbon reduction projects among G7 members—could be used to create financeable revenue streams for projects. These measures could be further complemented by programs such as Japan’s GX bonds, and South Korea’s climate funds could also co-finance LNG aligned with energy security and emissions transitions.

The use of certified natural gas can further demonstrate a clear pathway to decarbonization and alignment on values within G7+, in turn reducing project finance risks and improving project economics through enhanced pricing and offtake, and enabling access to transition finance.

Japan’s Emissions Trading Opportunity

Launched in 2023, the GX-ETS is a central component of Japan’s strategy to achieve carbon neutrality by 2050 and support industry decarbonization through a phased approach. Auctioned carbon credits support the repayment of Climate Transition Bonds (GX Bonds) which support transition-focused spending in areas such as hydrogen, ammonia, carbon capture, and EV infrastructure. These sovereign bonds aim to raise approximately ¥20 trillion (US$150 billion) by the early 2030s, catalyzing greater capital mobilization of approximately ¥150 trillion (US$1 trillion) in public and private investments.

While its focus is on domestic decarbonization, Japan has expressed interest in securing clean energy and low-carbon supply chains abroad and in funding the development costs of clean technologies.

Canada can benefit significantly by aligning its clean fuel exports—especially LNG and hydrogen—with Japan’s GX goals, provided projects meet Japan’s standards on carbon intensity, transparency, and reliability.

Here’s how:

Japan’s GX policy accepts low-carbon LNG—particularly if paired with methane abatement, CCS, or certified emissions standards—as transition-aligned. Canadian LNG could qualify for long-term GX-aligned supply contracts, if emissions reductions are verifiable.
Japanese investment via GX Transition Bonds, especially in infrastructure such as liquefaction and CCS-enabled transport. The country is already engaging Australia and other countries for clean ammonia. Canada’ low-carbon certified energy products can tap several opportunities including financing through GX Transition Bonds and Japan’s Joint Crediting Mechanism (JCM)—a bilateral initiative launched by the government to facilitate GHG emission reduction in collaboration with partner countries.
Canada can also participate in Japan’s plan to scale imports of green and blue hydrogen and ammonia for power and industrial use, given Canada’s potential to produce green hydrogen, and several hydrogen hubs under development in Alberta and Newfoundland and Labrador. Blue hydrogen, through natural gas with CCS potential, could emerge as another opportunity.
Japan’s economy also needs power to maintain its edge in computation and digital infrastructure. Data centres, AI and digital infrastructure are going to depend on natural gas. — Robert J. Johnston.

5. Create a Centre of Excellence to share market insights, technologies and best practices

The U.S. and Canada have strong incentives for cooperation on natural gas. The two countries have deeply integrated domestic markets, growing demand for gas-fired electricity to support reindustrialization and data centres, and a shared need to ensure growing exports do not lead to higher prices at home. Increasingly, as LNG exports from North America grow, the incentives for cooperation and coordination across the G7+ loom large.

The G7+ can advance these interests through a new organization to provide follow-on technical and policy action to support the implementation of a decarbonized and derisked natural gas market. Canada would be an excellent location for such a centre, given its role as the host of the 51st G7 leaders’ summit, longstanding commitments to climate action, technical expertise in horizontal drilling, methane capture and electrification, and growing role as a producer.

The Centre could sponsor technical, applied research in areas like methane mitigation, lower cost ammonia and hydrogen fuels. Equally important would be policy research and financial innovation supporting areas such as regulatory project assessment, community benefits sharing, methane MMRV, and sustainable/transition finance to support developing countries. The Centre could further embrace analysis of carbon market development, including markets for certified natural gas.

A G7 Centre of Excellence would be a clear signal from the world’s leading natural gas producers and consumers of their commitment to a derisked and decarbonized global gas market.

Certified gas: The gold standard

Several natural gas certification programs underwritten by independent third parties have emerged in recent years. North American operators Project Canary, Equitable Origin (EO), and MiQ (Methane Intelligence) play a meaningful role in certifying the carbon, environmental and human-rights credentials of natural gas.

In North America, about 30% of natural gas is currently certified to EO and MIQ. A third of production from Canada’s Montney basin is certified, as is two-thirds of contracted supply of the soon-to-launch LNG Canada. Over half the production from the Utica and Marcellus in the northeastern U.S. is certified as well.

For methane, where leaks often go unreported, producers certify natural gas volumes to MiQ as a way of highlighting the low carbon pedigree of their molecules. Additional environmental and social performance aspects that exceed regulatory minimums such as Indigenous equity participation and water use minimization are captured under the EO standard, largely consistent with disclosures that would be required under the EU’s emerging Corporate Sustainability Reporting Directive. The theory is that that these environmental and social attributes would lead to higher prices or, at a minimum, better market access.

The certified market is in the early stages of development, but the outlook for certified natural gas and potential regulatory catalysts could drive a bigger, more liquid market. If enough countries jointly developed and implemented a methane-intensity requirement (or broader certification standard) that exceeded the volume of certified natural gas, then the value of the certifications would increase and further incentivize emissions reduction.

Finally, field-based audit by industry experts following increasingly well-defined assurance processes consistent with ISO and IFRS norms adds rigour and a paper trail to claims of higher commitment and associated performance on the ground. Certifications can also assist in reducing project finance and insurance risk premiums, improving project economics through the potential for enhanced pricing and offtake, and enabling access to transition finance. Dr. Robert J. Johnston

The Big 5: The power sources that fuelled the global economy over the past 25 years

Coal

2000: 24% of global market share
2024: 26% of global market share

Global coal consumption has risen 67% since 2000, with growth in Asia more than offsetting declines in Europe and North America. China alone accounted for 74% of Asian growth. While Chinese consumption is expected to decline, rising consumption in India and Southeast Asia means coal will remain a critical energy source in Asian economies.

Oil

2000: 37% of global market share

2024: 31% of global market share

Global oil consumption is up almost 30% since 2000, with China accounting for over half of global growth. North American and European consumption is largely flat, with growth primarily coming from emerging markets. Transport across road, marine and shipping has represented almost 80% of global oil demand growth since 2000. Still, oil’s dominance within global energy systems continues to fall.

Nuclear

2000: 7% of global market share

2024: 5% of global market share

Energy generation from the technology has remained relatively consistent over the past quarter century, with declines in the developed world offset by new capacity in China. New nuclear power plants proposed and underway in Asia, revival of nuclear power plants in Canada and Europe, and new reactor designs in the U.S., largely driven by the electricity needs of data centres, could offset historical declines in nuclear.

Renewables

2000: 10% of global market share

2024: 13% of global market share

Wind and solar generation has grown exponentially from negligible levels in 2000, boosting total renewables (including hydro and biomass) global primary energy market share to 13%. Growth in other renewable generation sources such as geothermal are also growing moderately.

Natural Gas

2000: 22% of global market share

2024: 25% of global market share

Gas has boosted its market share over the past quarter century on rising demand from several economies. The power sector’s shift from coal to gas has also spurred demand and helped lower emissions for several countries, including Canada. Since 2000, 50% of gas growth has come from the power sector. Another 12% from the energy industry and another 8% from the residential sector. As a critical feedstock for petrochemicals, gas was also at the centre of a plastics boom. The globalization of LNG markets, with several new countries building LNG import terminals, has also driven demand.

All data sourced from BNEF World Energy Outlook

The Growth Project

The report is part of RBC’s Growth Project, an initiative to spark new ideas for the Canadian economy. For more on the Growth Project, click here.

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Authors
Shaz Merwat, Energy Policy Lead
Kathleen Gnocato, LNG Research Initiative Lead, Independent Consultant

Contributor
Dr. Robert J. Johnston, Senior Director of Research, Center on Global Energy Policy, School of International and Public Affairs, Columbia University

Editor
Yadullah Hussain, Managing Editor

Design and production
Shiplu Talukder, Digital Publishing Specialist

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All data from Rystad Energy unless otherwise mentioned. Rystad gas and LNG data is sourced from Rystad’s Gas and LNG Macro Solution module. Rystad energy and emissions data is sourced from Rystad’s Energy Scenario Solution module.

Please refer to Behind the scenes-our research approach section for more details on the research collaboration.

1. McKinsey & Co.
2. International Energy Agency
3.The Institute of Energy Economics, Japan, 2025 Outlook

In this week’s edition: Canada-U.S. in two phases, Trump’s three recurring trade narratives, and how businesses are handling the uncertainty

Noteworthy

Ottawa played host this week to some high-profile guests, from a gaggle of U.S. senators to King Charles—plus the first session of Parliament in 161 days.

Five U.S. senators, including one Republican, met with senior government officials to reinforce the Canada-U.S. relationship. A two-phase deal is being considered.
- Phase 1: The climbdown of Section 232 (steel, aluminum and auto tariffs on national security grounds) in exchange for an increase in Canada’s defence spending commitment, which explains the ‘Golden Dome’ missile system talk. There’s some optimism that this can be done before or during the G7 Summit—though time is running out as that begins in two weeks.
- Phase 2: The broader renegotiation of CUSMA. Expect that to start as early as this summer and conclude just before the review deadline of July 1, 2026.
The economic and security agreement got a shout out in the King’s Speech from the Throne, as did Carney’s trade diversification priorities. The legislative agenda, and the work that will happen during the summer session of the House, will likely be more domestically focused, including fast-tracking projects in the national interest and resolving federal barriers to internal trade. Expect Canada-U.S. negotiations to happen in the background—as was the case with Minister Dominic LeBlanc’s meeting with Secretary Howard Lutnick and USTR’s Jamieson Greer last week.

The week that was

A day after the U.S. Court of International Trade ruled that Trump overstepped by using the International Emergency Economic Powers Act (IEEPA) to impose tariffs, a federal appeals court reinstated them, at least temporarily.
The sluggish labour market in China may get a whole lot worse: Nine million manufacturing jobs in China could be lost due to the trade war.
Clear Seas estimates that by 2040, if all planned projects pan out, there will be a 60% increase in ship traffic on Canada’s Pacific Coast. The main driver: LNG projects.
Japan’s biggest businesses are getting hammered, prompting the government to step up with a US$6.3 billion package to protect its economy.
Trade-related crime is spiking in the U.S. And it’s proving tough for the government to stop.
India is playing hardball with the U.S. on key commodities (rice, wheat, maize) and dairy.
A UN agency predicts that trade-war-induced instability will lead to seven million fewer jobs in 2025 than first predicted. And U.S. consumer demand is connected to another 84 million jobs. Canada and Mexico, with 17.1% of roles tied to the U.S., are the most exposed.

The view from Washington

Washington’s word of the week is TACO—Wall Street shorthand for “Trump Always Chickens Out.” A phrase that underscores growing skepticism regarding the White House’s resolve to maintain tariffs in the face of market pressures and retaliatory actions from trading partners. The reality is more complicated. To justify trade policies, the administration relies on a rotating carousel of narratives:

A negotiating tactic to achieve other foreign-policy objectives. The White House applies this reasoning when implementing fentanyl-related tariffs on Canada and Mexico and frequently uses it as a crutch to justify cancelled or postponed tariffs: mission accomplished, claim victory and move on. Tariffs are short-lived in this line of thinking, and often resolved or scaled back by minor concessions from the target nation.
An industrial policy lever. They’re meant to encourage firms to reshore supply chains and production lines, which aligns with Trump’s promise to restore U.S. manufacturing to its former glory through sector-specific tariffs on autos, steel, and aluminum. Under this reasoning, tariffs are all about pointing to new production plants and other significant investments.
A tool for government revenue generation. Although the hype around Trump’s External Revenue Service has died down (for now), this narrative dominated the first weeks of the administration’s trade policy strategy. When this is the goal, foreign countries have few carrots to offer that would change the President’s mind.

The challenge is discerning which justification Trump is leaning towards on any given day. When asked about TACO this week, the President embraced the negotiation narrative. The narrative may change next week as the administration’s battle in court over IEEPA tariffs continues.

Three questions…

With Andrew Skinner, RBC’s VP of Trade Finance.

Q: How are businesses diversifying—both in terms of sourcing and selling?
A: Two key observations: In April, we had a record number of customers and prospective new users of our RBC Global Connect tool, which provides resources such as best countries to buy and sell and other trade intelligence. Secondly, some clients have found better margin opportunities in Europe for products historically shipped to the U.S. And importers are ensuring resiliency of supply by finding new suppliers.

Q: How have things changed in the past couple of months for companies that have maintained their business with U.S. customers?
A: Compliance with CUSMA rose to 50% in March from 33% in February. From client discussions, we expect this will be much higher now based on the noted estimate that 94% Canadian exports to U.S. are likely to comply. Clients have maximized U.S. inventory storage and distribution channels to meet short-term demand and minimize tariff impacts. They are also regularly reviewing timing of shipments and location of delivery to navigate U.S. tariffs. Some clients have been able to pass on higher tariff costs where alternative supply is unavailable, and demand persists. Others are pausing transactions to ensure certainty of pricing and demand, especially if they can’t cover tariff costs.

Q: What advice do you have for companies navigating the uncertainty?
A: We are encouraging clients to review their key buyer and seller trade cycle—order to payment, contract terms and documentation available—and identify opportunities to renegotiate terms. The aim is to maintain long-term relationships and avoid Back-to-School, Black Friday, and Christmas peak sales cycles disruptions. There are a range of solutions available to minimize payment risk, improve cash flow and enable cost/ return efficiencies as new markets, suppliers and buyers are being considered.

Key Points

More than 100 mineral projects, valued at $107 billion, are at various stages of development in Canada over the next ten years. Unlocking that potential requires diversified capital flow, both domestic and foreign, for Canada to emerge as a commodity powerhouse.

With Chinese capital constrained by stricter federal rules, American capital is the natural partner to help develop Canada’s mineral resources, given the two countries’ geo-strategic alignment. Still, recent bilateral trade tensions with the U.S., suggest Canada should be clear-eyed entering into new partnerships and diversify capital sources to derisk projects.

If part of a broader security framework, Canada can position itself as a key pillar of the U.S.’s focus on breaking China’s hold on the supply chains of several commodities critical for defence, energy and high-end manufacturing. New cross-border commodity supply chains could serve as the bedrock of a North American high-end manufacturing, defence and energy infrastructure revival.

Building metal and critical mineral projects requires patient, long-term investors who can guarantee either long-term offtake agreements or security of demand to ensure their economic feasibility. To derisk projects, Canada could broaden its capital base beyond the U.S. and tap various global sources of foreign capital that are on the hunt for strategic assets—provided they meet Canada’s national interest and energy security thresholds.

Canada in the Great Resource Game

Canada’s vast natural resources present compelling investment opportunities. Crucially, they’re becoming strategic assets for G7 and other allies in a fragmented world.

Mineral development also gives Canada an opening to service several core verticals—automotive, energy equipment, defence, and high-end manufacturing. With the right strategy, Canada can position itself as a new manufacturing supply chain hub in a geopolitically-charged world, as we wrote in The New Great Game.

But injecting geopolitics into the minerals development space is a double-edged sword.

This was evident in recent years with China, a major supplier of foreign direct investment (FDI) in the global mining sector. Its involvement in Canadian minerals over the past few years have come under strict scrutiny on security concerns—coming to a head in 2022 when Ottawa ordered three Chinese entities to divest from three Canadian mining companies. The move has largely frozen Chinese interest in Canada’s minerals’ sector.

American companies are seen as more natural partners for Canada to develop mineral resources, given the countries’ long-standing geopolitical alignment. Despite the U.S. trying to squeeze Canada on trade, defence and several sectors such as lumber, automotives and steel and aluminum, the synergies on metals and minerals could be strategic for both countries. Recent U.S. rhetoric aside, there is a sense that collaboration on several metals and minerals supply chains would fortify North American energy and national security.

Trump charts a new direction

Washington’s approach to minerals development is still being laid out.

Signals indicate that the U.S. is poised to act decisively on critical minerals¹ and other resources it considers vital for defence, technology, and semiconductors. The White House has fast-tracked 10 mining projects, signed an executive order aimed at stepping up deep-sea mining within U.S. and international waters, and floated the prospect of investing directly in mining companies, including through a proposed U.S. sovereign wealth fund.

Capitalizing on Canada's mineral bonanza

U.S. President Donald Trump’s hawkish stance on resource-rich Greenland, the recent signing of a minerals deal with Ukraine, and interest in one with the Democratic Republic of Congo, suggests minerals are a strategic asset in the U.S. quest to counter Chinese dominance.

Canadian Prime Minister Mark Carney’s interest in connecting trade talks with U.S. national security, dovetails with American interest in energy and minerals development. As recently as December², the two countries had invested in a critical mineral project in Yukon, part of a broader bilateral collaboration under the Canada-U.S. Joint Action Plan on Critical Minerals Collaboration and the Canada-U.S. Energy Transformation Task Force.

The U.S. and Canadian governments have already injected billions in capital into the space. Between 2021-2024, the U.S. government funded at least 24 critical minerals and materials projects, including five in Canada jointly with the Canadian government. Ottawa has also funded at least another five projects as of early 2024.

While Canada is keen to partner with its American counterparts on mineral development, it has taken measures in recent months to place some guardrails over its assets in a world that’s become more transactional and unpredictable. In March 2025³, the Innovation, Science and Industry Ministry, responsible for Canada’s investment review, expanded the criteria for national security review to include economic security, in a move seen directed at the U.S. And in April 2025, the Government of Ontario introduced new measures “to prevent foreign governments or corporations from claiming Ontario’s critical minerals.”⁴

Securing geo-strategic capital

To further derisk its resource base, Canada should tap into a wide variety of capital that’s on the hunt for strategic assets.

The Canadian mining sector is already a major capital magnet. There are currently more than 100 mineral and mining major projects underway in Canada at various stages of development (announced, in review, approved or under construction) valued at more than $107 billion in capital, according to the Natural Resources Canada’s major projects database. And the list has ballooned in recent years as interest in Canadian resources has grown.
But where will the capital come from?

As miners gear up for future development, they could tap four sources of capital: self-financing, global equity markets, foreign state-owned entities, and sovereign wealth funds (SWF)— each aligned to different investment horizons and risk appetites.

Foreign capital is already a well-established feature of Canadian mining, making up around 40-45% of investments flowing into the sector over the past few years.

Self-financing: Over the past two decades, capital raising for the minerals sector has been challenged as mining and mineral companies have lagged both the underlying commodity and the broader index. Across equities specifically, this underperformance is even greater on a risk-adjusted basis given the lower volatility in returns for both the S&P/TSX Composite and the S&P 500.

This has emerged as a key financing challenge for companies. Yet a new commodity super cycle, driven by geopolitical and energy transition dynamics, could drive renewed investor interest in the sector.
Despite the market underperformance, Canadian miners are generally in good shape to partially fund projects. The sector enjoys financial strength and discipline as evident from its 0.7x capex-to-cash-flow over the past 12 months (compared to 1x in the past 10 years), indicating that funds are available to invest, while the debt burden has also fallen considerably in recent years⁵.

All told, the S&P/TSX metals and mining firms have accumulated as much $14 billion in excess cash flow over the past 12 months, ready to be deployed globally⁶. While Canada could attract a portion of that, companies will still need to tap into a variety of other capital sources to finance projects.

Equity markets: Public equity markets remain a viable capital source. New corporate equity issuance is also an attractive option from institutional and Western capital, majority of which is composed of passive or long-only funds. While investor risk appetite has been lukewarm, new macroeconomic and geopolitical drivers, coupled with strong company balance sheets could shift investor sentiment.

State and SWFs: Sustaining some of these projects with long gestation periods require geopolitical actors that take a long-term view on strategic resources. They are already on the hunt: between 2022-2024, we estimate that about 20% of global mining M&A originated from sovereign wealth funds (SWFs). The share of state-linked transactions was almost certainly higher, since the majority of China’s 18% share of global deals would have been done through its state-linked corporates.

State capitalism extends beyond sovereign wealth funds, and could include corporations that are linked to or championed by governments.

Among such state-owned entities, not all actors would be classified as high geopolitical risk like those from China, in terms of threatening market control or transferring minerals’ intellectual property (IP). Clean energy infrastructure funds linked to public pensions funds, sovereign wealth funds or large private equity firms are also eyeing opportunities in mining. Canada’s well-capitalized pension funds could also play a role here.

Other deep-pocketed investors—such as Middle Eastern sovereign wealth funds and state-owned entities—could be more active in the future. While an important source of capital, they could pose security challenges, ranging from shifting geopolitical alliances or bilateral diplomatic spats, such as Canada’s diplomatic fight with Riyadh in 2018 over Saudi Arabia human rights record.

Containing China

The issues around security of strategic assets cannot be underestimated, and will only gain more traction, as evident with Washington and Beijing locking horns over supply chains. As President Trump embarks on signing trade deals with several countries, he may pressure those nations to purge Chinese capital from their mining supply chains.

That wouldn’t be entirely without precedent. Concerns over Chinese capital compelled the prior U.S. administration of Joe Biden to enhance its internal review of new Chinese investments in critical minerals and other strategic sectors⁷. In the past, Washington has also raised concerns more broadly about new Chinese investment in its allies, putting pressure on close trading partners Canada and Mexico to fortify their review processes.

Bolstering the Investment Canada Act
That has already triggered a shift in how Canada has handled Chinese investments in recent years. In 2022, the Investment Canada Act (ICA) national security provisions were enforced to require the divestiture of Chinese investment in three Canadian critical minerals companies with lithium mining activities. In doing so, the critical minerals sector was flagged for enhanced government scrutiny⁸.

Further amendments over the past year give the federal government enhanced scope to complete a national security review for any new foreign investment in Canada, not just those with controlling interests, and greater scrutiny of investments by state-owned entities (SOE), which primarily targets China.

Amendments also asserted quasi-extraterritorial powers of the ICA – that the foreign assets of Canadian businesses were within scope of ICA review in case of foreign SOE acquisition.

Canada’s expanded reach
Combined with the fact that Canada has major mining concentration—the Toronto Stock Exchange and the TSX Venture Exchange represent 40% of the world’s public mining companies and are home to more than a 1,000 listings—, the ICA’s quasi-territorial means it’s a powerful tool for policing some Chinese investments abroad. Canada has recently asserted this authority, with two Canadian companies attempting to re-domicile to avoid the ICA review.

In the case of a more significant break with China, President Trump may seek a broader Chinese investment purge by Canada as the cost of participating in U.S.-centric supply chains. For one, it could push Canada to test its powers under the ICA. It could also take issue with some legacy investments by Chinese state-owned companies in large Canadian miners (see Managing legacy Chinese investments).

However, a provoked China could retaliate against Canada by closing its markets to certain exports, similar to its tariffs on Canadian canola in March, or by further weaponizing its supply chain.

Even as China’s capital or long-term supply agreements may no longer be welcome in the Canadian mining sector, it remains a major supplier of industrial equipment and parts. Western governments could replace Chinese equipment over time, but it is sand in the gears of further developing resources. Trump’s recent backtracking on Chinese tariffs at the behest of American corporations points to the importance of Chinese materials in the global economy.

Managing legacy Chinese investments

Analyzing the largest public Canadian mining companies reveals three with material Chinese ownership from state-owned entities. No major U.S. mining companies have similarly significant or state-sponsored Chinese interests.

Given that these are legacy investments, the Canadian government lacks the legal authority to compel their divestiture, notwithstanding the shifting national security lens.

In the U.S., President Trump’s recent political pressure may have compelled the planned sale of Hong Kong-based Hutchison Whampoa’s stake in Panama Canal and other ports to an American-led consortium (currently paused while under review by China). Ergo, other tools may be within the Canadian government’s control to achieve its aims, but they could come at the cost of provoking China and damage to Canada’s reputation as an investor-friendly jurisdiction.

Canada’s investment opportunity

The world’s looking at Canada as a stable and dependable commodity player to help diversify its commodity supply. It’s also a generational opportunity for the provinces and the federal government to unlock resource developments that are rich in gold (vital as a safe haven commodity), copper, iron and critical minerals. The right strategy, investments and security measures can help power Canadian mining.

Contributors:
Cynthia Leach, Assistant Chief Economist, RBC Economics
Shaz Merwat, Energy Lead, RBC Thought Leadership
Vivan Sorab, Senior Manager, RBC Thought Leadership
Yadullah Hussain, Managing Editor, RBC Thought Leadership

Caprice Biasoni, Graphic Design Specialist

Shiplu Talukder, Digital Publishing Specialist

[1] https://www.whitehouse.gov/presidential-actions/2025/04/unleashing-americas-offshore-critical-minerals-and-resources/

[2] https://www.canada.ca/en/natural-resources-canada/news/2024/12/canada-and-united-states-co-invest-to-unlock-critical-minerals-development-in-yukon.html

[3] Guidelines on the National Security Review of Investments – Investment Canada Act

[4] Protecting Ontario’s Critical Minerals and Energy Sector | Ontario Newsroom

[5] The sector’s capex-to-cash flow of 0.7x over the past 12 months and debt-to-cash flow ratio of 1.1x are both well below their 10-year averages of 1.0x and 2.1x, respectively.

[6] Float-cap weighted average trailing twelve month operating cash flow less capital expenditures less dividends less buybacks across the S&P/TSX Metals and Mining Index (GICS Level 3)

[7] https://bidenwhitehouse.archives.gov/briefing-room/statements-releases/2024/09/20/fact-sheet-biden-harris-administration-takes-further-action-to-strengthen-and-secure-critical-mineral-supply-chains/

[8] https://www.canada.ca/en/innovation-science-economic-development/news/2022/10/government-of-canada-orders-the-divestiture-of-investments-by-foreign-companies-in-canadian-critical-mineral-companies.html

Trade Zone: The Great Canadian Stampede to find new trading partners

Platform: The Trade Hub

Executive Summary

Shifting trade policy landscape for supply managed industries

What’s at stake?

The 3S of supply management

Sovereignty

Eliminating loopholes

Stability

Standards

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New Zealand: An international leader with a rising GHG footprint

United Kingdom: Transitioning away from the EU model

Brazil: The struggle to break into the global market despite high ambition

Market Outlook

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The next step: Tying food solutions to Canada’s growth ambitions

Experiences and approaches from around the world

Our Project Partners

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Key Findings

The Long Game for LNG

A Role for the G7+

The World of 2040: Four Very Different Scenarios

Four Scenarios

The Kananaskis Agenda: An Action Plan for Natural Gas

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Key Points

Canada in the Great Resource Game

Trump charts a new direction

Securing geo-strategic capital

Containing China

Managing legacy Chinese investments

Canada’s investment opportunity